Amazon’s strategy to profit from its Alexa-enabled devices has seemingly fallen short, resulting in substantial financial losses. Reports indicate that the company lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, as per the Wall Street Journal, which referenced internal documents and sources familiar with the situation. Although Amazon boasts a large customer base for its devices, it turns out that most users utilize Alexa-enabled Echo speakers primarily for simple tasks like setting alarms rather than shopping.
A former senior employee expressed concerns about the situation, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon’s CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of the voice assistant. However, some engineers working on this paid version remain skeptical about its potential impact.
An Amazon spokesperson commented on the matter, emphasizing, “We’re focused on the value we create when customers use our services, not just when they buy our devices.” They highlighted that the Devices & Services division has been successful in establishing profitable ventures and is poised for further growth.
Additionally, the newly unveiled AI-powered Alexa, demonstrated in September, is reportedly far from being fully operational, according to former employees. The company lacks adequate data and essential chips to support the large language model integral to the new assistant. Furthermore, Amazon is said to have shifted its focus toward generative AI development for its cloud computing branch, Amazon Web Services.
Amazon countered the claims of its former employees, asserting that these individuals are misinformed regarding its current AI initiatives. The company emphasized that its Artificial General Intelligence team has access to in-house Trainium chips and Nvidia GPUs, reaffirming its commitment to developing “the world’s best personal assistant.”