Amazon’s strategy to profit from its Alexa-enabled devices has reportedly failed, resulting in substantial losses for the company.
According to a report from the Wall Street Journal, internal documents indicate that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of users, the Alexa-enabled Echo speakers are primarily used for setting alarms and other free applications rather than shopping on Amazon.
A former senior 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 exploring solutions, including the introduction of a paid tier for Alexa. However, some engineers working on the upgraded version of the voice assistant have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized that the company is focused on delivering value through its services, not just through device sales. They stated, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
Additionally, Amazon’s new AI-powered Alexa, showcased in September, is reportedly far from ready, according to former employees. Concerns have been raised about a lack of data and adequate chips necessary for operating the large language model that powers the new assistant. Furthermore, it has been reported that Amazon is prioritizing generative AI development for its cloud computing arm, Amazon Web Services, over advancements for Alexa.
Amazon has countered these claims, asserting that its former employees are misinformed about the current state of its Alexa AI initiatives. The company maintains that its Artificial General Intelligence team has access to the necessary resources, including in-house Trainium chips and Nvidia GPUs, as it aims to create the world’s best personal assistant.