Amazon’s initiative to profit from its Alexa-enabled devices has reportedly resulted in significant financial losses for the company, amounting to over $25 billion between 2017 and 2021, according to a report by the Wall Street Journal that cites internal documents and sources familiar with the situation. Despite having hundreds of millions of customers for its devices, it appears that Amazon’s Echo speakers are predominantly used for basic functions, such as setting alarms, rather than for 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 these challenges, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a paid tier for Alexa. However, some engineers involved in developing this version of the voice assistant are skeptical about its potential impact, according to information shared with the Wall Street Journal.
An Amazon spokesperson emphasized the company’s focus on the value created through customer engagement with their services, rather than solely on device sales. They highlighted that the Devices & Services organization has successfully established several profitable ventures for Amazon and is positioned for future growth.
Additionally, Amazon’s latest artificial intelligence-enhanced version of Alexa, unveiled in September, is reportedly not yet operational, according to former employees. The company is said to lack sufficient data and the necessary chips to support the large language model that powers the new assistant. Instead, resources are reportedly being redirected towards enhancing generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon stated that the observations made by former employees are inaccurate and that the Amazon Artificial General Intelligence team has access to the required in-house Trainium chips and Nvidia GPUs. The company’s commitment to developing Alexa as the world’s leading personal assistant remains unchanged.