Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to the Wall Street Journal, internal documents reveal that Amazon lost over $25 billion on products like the Echo and Kindle between 2017 and 2021. Despite the vast number of customers using these devices, it appears that many utilize the Alexa-enabled Echo speakers primarily for basic functions such as setting alarms, rather than shopping on Amazon.
A former senior Amazon employee expressed concern about the situation, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In search of potential solutions, Amazon’s CEO Andy Jassy is exploring the introduction of a paid version of its voice assistant. However, reports from the Wall Street Journal suggest that some engineers involved in this initiative remain skeptical about its efficacy.
An Amazon spokesperson told Quartz that the company prioritizes the value created through customer interactions with their services, beyond merely selling devices. They emphasized that their Devices & Services division has established several profitable ventures and is poised for future success.
In parallel, Amazon’s new AI-enhanced version of Alexa, which was showcased in September, is reportedly not fully developed. Former employees indicated that the company lacks sufficient data and access to the necessary technology to implement the advanced language model driving this latest iteration of the virtual assistant. Furthermore, it seems that Amazon has chosen to focus its resources on generative AI for its cloud computing branch, Amazon Web Services, rather than advancing the AI capabilities of Alexa.
In response to these claims, Amazon insisted that the statements from former employees are inaccurate, asserting that the Amazon Artificial General Intelligence team has the requisite access to both in-house Trainium chips and Nvidia GPUs. The company’s objective for Alexa, they reaffirmed, is to create “the world’s best personal assistant.”