Amazon’s strategy to generate revenue from its Alexa-enabled devices has not yielded the expected results, leading to significant financial losses for the company, amounting to over $25 billion from 2017 to 2021, according to a report from the Wall Street Journal that refers to internal documents and unnamed sources. Despite having hundreds of millions of users for its devices, usage of Alexa-enabled Echo speakers has largely been limited to basic functions like setting alarms, rather than driving Amazon purchases.
A former senior Amazon employee expressed concerns over the significant investment in hiring more than 10,000 staff members for what has turned into a smart timer rather than a profit-generating tool.
In response to these challenges, CEO Andy Jassy is exploring solutions and is set to introduce a paid version of Alexa. However, some engineers working on this initiative are skeptical about its potential impact.
An Amazon spokesperson emphasized that the company is prioritizing the overall value created through its services, beyond just device sales. They mentioned that the Devices & Services division has developed several profitable ventures and is positioned for future growth.
On another front, Amazon’s newly unveiled AI-enhanced Alexa, showcased in September, faces readiness issues, according to former employees. Reports suggest the company lacks sufficient data and access to necessary chips to support the large language model behind the updated assistant. Furthermore, Amazon has allegedly shifted its focus from the AI version of Alexa to prioritize generative AI initiatives for its cloud computing branch, Amazon Web Services.
In response to these claims, Amazon stated that former employees may lack accurate information about the current state of its Alexa AI projects and asserted that its Artificial General Intelligence team has access to essential resources, including in-house Trainium chips and Nvidia GPUs. The company reaffirmed its commitment to developing Alexa as the leading personal assistant.