Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly backfired, resulting in significant losses for the company. According to a report from the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and insights from unnamed sources.
Despite having hundreds of millions of customers using its devices, the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms, rather than for making purchases on Amazon. A former senior employee expressed concerns about the company’s direction, 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 reportedly seeking solutions and plans to introduce a paid version of its voice assistant. However, some engineers involved in this project are skeptical about whether it will succeed in generating revenue.
An Amazon representative stated, “We are focused on the value we create when customers use our services, not just when they buy our devices,” asserting that the Devices & Services organization has established several profitable ventures and is poised for future success.
Additionally, Amazon’s recently unveiled AI-powered Alexa, demonstrated in September, is said to be far from completion, as reported by former employees. They indicated that the company lacks sufficient data and the necessary chips to implement the large language model that would enhance its virtual assistant. It has also been reported that Amazon is shifting its focus towards developing generative AI for its cloud computing division, Amazon Web Services.
In response to these criticisms, Amazon argued that its former employees are misinformed about the current state of its Alexa AI initiatives, claiming that the Amazon Artificial General Intelligence team has access to proprietary Trainium chips and Nvidia GPUs, and affirming its goal to create the world’s best personal assistant.