Amazon’s strategy to profit from its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company, estimated at over $25 billion between 2017 and 2021. According to the Wall Street Journal, which cited internal documents and sources familiar with the situation, the online retail giant has seen its Echo, Kindle, and other devices fail to generate expected revenue.
Despite the millions of customers using these devices, Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms and utilizing free apps rather than facilitating purchases on Amazon’s platform. A former senior Amazon employee expressed concern about the direction of the company’s investments, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the mounting losses, Amazon CEO Andy Jassy is exploring remedies, including the launch of a paid version of the voice assistant. However, some engineers involved in developing this paid upgrade have expressed doubts about its potential success.
An Amazon spokesperson highlighted the company’s focus on the value provided through its services rather than solely device sales, stating that the Devices & Services division has established several profitable ventures that are expected to continue.
Furthermore, Amazon’s latest innovation, an AI-powered version of Alexa demonstrated in September, appears to be far from completion, according to former employees. Reports indicate that Amazon lacks sufficient data and the necessary hardware to support the advanced large language model driving the new assistant. Additionally, the company has reportedly shifted its priorities to concentrate on generative AI for its cloud computing arm, Amazon Web Services.
In rebuttal to these claims, Amazon contended that former employees are misinformed about its Alexa AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to essential in-house Trainium chips and Nvidia GPUs. Amazon’s vision for Alexa remains steadfast: to create the world’s best personal assistant.