Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly backfired, costing the company billions. According to internal documents and sources familiar with the situation, from 2017 to 2021, Amazon lost over $25 billion on products like the Echo and Kindle.
Despite having hundreds of millions of customers using these devices, the primary functions of the Alexa-enabled Echo speakers tend to be setting alarms and accessing free apps, rather than facilitating purchases on Amazon.
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 seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in this project are skeptical about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value provided to customers through its services beyond just device sales, citing that the Devices & Services sector has successfully established multiple profitable businesses.
Meanwhile, the anticipated AI-powered upgrade to Alexa, demonstrated in September, is reportedly facing significant delays. Former employees have raised concerns about the availability of necessary data and chips essential for operating the advanced language model that will support the upgrade. Reports indicate that the company has shifted its focus to developing generative AI technologies for its cloud division, Amazon Web Services, rather than progressing with the new version of Alexa.
Amazon has countered claims from former employees, asserting that the claims regarding its AI developments are incorrect, and stated that its Artificial General Intelligence team has access to both Trainium chips and Nvidia GPUs. The company reiterated its commitment to creating the “world’s best personal assistant.”