Amazon’s efforts to profit from its Alexa-enabled devices appear to have backfired, resulting in losses exceeding $25 billion from 2017 to 2021, according to internal documents and sources familiar with the situation. Despite boasting hundreds of millions of customers for devices like the Echo and Kindle, it seems that users primarily utilize Alexa for setting alarms and accessing free applications rather than for shopping on Amazon.
A former senior employee expressed concerns about the company’s investments, saying, “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 exploring solutions, including the launch of a paid tier for its voice assistant. However, some engineers involved in this initiative are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s commitment to creating value through its services rather than solely through device sales, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In addition, Amazon’s new AI-enhanced Alexa, showcased in September, is reportedly not ready for deployment, as former employees indicate it lacks sufficient data and the necessary technology to operate the large language model (LLM) that powers the updated assistant. Moreover, it has been reported that the company has shifted focus from AI development for Alexa to prioritize generative AI projects for its cloud computing division, Amazon Web Services.
Amazon refuted claims from former employees, asserting that the Amazon Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs. The company reiterated its vision to develop “the world’s best personal assistant.”