Amazon’s strategy to profit from its Alexa-enabled devices has reportedly backfired, leading to significant financial losses for the company. According to the Wall Street Journal, internal documents reveal that Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. While the company has a vast customer base for these devices, many users prefer to utilize features such as alarms and free applications rather than making purchases through Amazon.
A former senior employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon’s CEO Andy Jassy is seeking solutions, including the introduction of a paid tier for the Alexa voice assistant. However, some engineers involved in this effort are doubtful about its efficacy, as reported by the Wall Street Journal.
An Amazon spokesperson clarified that the company focuses on the value generated for customers using its services, rather than solely on device sales. They emphasized that the Devices & Services division has successfully established various profitable ventures and is poised to continue this trend moving forward.
In addition, Amazon’s new AI-enhanced Alexa, showcased in September, is said to be far from readiness. Former employees indicated that the company lacks sufficient data and access to the necessary technology for implementing the large language model that powers the updated version. Amazon has reportedly shifted its priorities towards developing generative AI for its cloud services, Amazon Web Services, rather than advancing Alexa AI.
In response to the critiques, Amazon disputed the accuracy of former employees’ claims, asserting that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company’s objective for Alexa remains unchanged: to create the world’s leading personal assistant.