Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly resulted in significant financial losses, costing the company over $25 billion between 2017 and 2021, according to internal documents and sources cited by the Wall Street Journal. Despite having hundreds of millions of customers, the Echo speakers, which feature Alexa, are primarily used for basic functions like setting alarms rather than for shopping.
Concerns have been raised by former Amazon employees regarding the company’s investment in these devices, with one stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the financial setbacks, Amazon CEO Andy Jassy is exploring ways to turn the situation around, including the introduction of a paid version of Alexa. However, there are mixed opinions among engineers about whether this new model would effectively address the challenges they face.
An Amazon spokesperson emphasized their commitment to creating value through their services beyond just device sales, noting that the Devices & Services division has successfully launched several profitable initiatives.
Furthermore, the company’s new AI-enhanced version of Alexa, showcased in September, is reportedly facing readiness issues. Former employees claim there is insufficient data and a lack of access to necessary chips for running the advanced language model. Additionally, it has been suggested that Amazon has shifted its focus away from AI development for Alexa to prioritize generative AI projects within its cloud computing sector, Amazon Web Services.
In response to these claims, Amazon refuted the assertions of its former employees, stating that they are not accurate regarding the company’s AI capabilities and that the Amazon Artificial General Intelligence team has access to essential resources, including in-house Trainium chips and Nvidia GPUs. The company reiterated its aim to build “the world’s best personal assistant” with its Alexa service.