Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to the Wall Street Journal, internal documents and sources close to the matter indicate that Amazon experienced losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. While Amazon boasts hundreds of millions of users for its devices, the predominant use of its Echo speakers appears to be basic functions, such as setting alarms and utilizing free applications, rather than facilitating shopping 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, Amazon CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid tier for its voice assistant. However, insiders have indicated that some engineers working on the premium version of Alexa remain doubtful about its potential impact.
An Amazon spokesperson emphasized the company’s focus on creating value through customer interactions with its services, not solely through device sales. They noted that the Devices & Services division has generated several profitable ventures for Amazon, positioning it well for future success.
In addition, Amazon’s newly introduced AI-powered Alexa, showcased in September, is reportedly not yet fully developed. Former employees cited a lack of sufficient data and essential chips for running the large language model (LLM) that powers the updated version of the virtual assistant. The company has also allegedly shifted its priorities towards generative AI development for Amazon Web Services, rather than advancing the AI capabilities of Alexa.
In response to these claims, Amazon disputed the accuracy of the former employees’ assertions regarding its AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to both its Trainium chips and Nvidia GPUs. The company reiterated its commitment to its goal of creating the world’s premier personal assistant.