Amazon’s initiative to generate revenue from its Alexa-enabled devices has reportedly not been successful, resulting in significant financial losses for the company. According to a report by the Wall Street Journal, internal documents indicate that Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021. While the company has a vast user base for its devices, it appears that many customers predominantly use the Alexa-enabled Echo speakers for simple tasks like setting alarms rather than making purchases on Amazon.
A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, Amazon CEO Andy Jassy is seeking solutions and is said to be launching a paid version of its voice assistant. However, some engineers working on this new paid Alexa are reportedly skeptical about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value provided to customers when using their services rather than solely on device sales. The statement noted that Amazon’s Devices & Services organization has built several profitable ventures and is positioned for continued growth.
In addition, Amazon’s new AI-powered Alexa, showcased in September, is reportedly not yet ready, based on insights from former employees. They suggest that the company lacks sufficient data and necessary hardware to support the large language model driving the upgraded assistant. Furthermore, Amazon has shifted its priorities, concentrating on developing generative AI for its cloud division, Amazon Web Services.
Amazon refuted claims from former employees regarding its AI efforts, asserting that the Amazon Artificial General Intelligence team has access to essential resources, including in-house Trainium chips and Nvidia GPUs. The company reaffirmed its goal to create “the world’s best personal assistant” with Alexa.