Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly not been successful, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. While Amazon boasts a user base in the hundreds of millions for its devices, its Alexa-enabled Echo speakers are primarily utilized for tasks such as setting alarms rather than shopping.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to the situation, Amazon’s CEO Andy Jassy is actively seeking solutions, including the introduction of a paid tier for its voice assistant. However, there are reservations among some engineers about whether this initiative will be effective.
An Amazon spokesperson commented that the company focuses on the value created through its services rather than just device sales. They noted that the Devices & Services organization has established several profitable ventures for Amazon and is positioned to continue this trajectory.
In addition, reports indicate that Amazon’s new AI-powered version of Alexa, showcased in a recent demo, is not yet ready for launch. Former employees have stated that the company lacks sufficient data and access to the necessary chips to support the large language model driving the upgraded assistant. Furthermore, Amazon has shifted its focus from Alexa to prioritize generative AI developments within its cloud computing division, Amazon Web Services.
Amazon dismissed claims from former employees as inaccurate, asserting that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company reiterated its commitment to developing what it aims to be the world’s best personal assistant.