Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly backfired, resulting in losses amounting to billions for the company. According to a report from the Wall Street Journal, internal documents and unnamed sources indicated that Amazon lost over $25 billion on Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, the Alexa-enabled Echo speakers are primarily used for functions like setting alarms, rather than shopping on Amazon.
A former senior Amazon employee remarked, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to the financial setbacks, Amazon’s CEO Andy Jassy is seeking solutions and is expected to introduce a paid version of the voice assistant. However, some engineers have expressed concerns that this change may not significantly impact usage or profits.
An Amazon spokesperson stated, “We are focused on the value we create when customers use our services, not just when they buy our devices,” emphasizing that the Devices & Services organization has generated profitable ventures for Amazon and remains poised for future success.
In addition, the new AI-enhanced Alexa, demonstrated in September, is reportedly far from ready, as former employees have suggested that the company lacks sufficient data and the necessary chips to operate the large language model that powers the updated assistant. Instead, Amazon is prioritizing generative AI developments within its cloud computing division, Amazon Web Services.
In response to these claims, Amazon contested the statements from former employees, insisting they are misinformed about the current state of Alexa’s AI initiatives. The company confirmed that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reaffirming its commitment to developing the “world’s best personal assistant.”