Amazon’s strategy to generate revenue from its Alexa-enabled devices has not yielded the expected results, reportedly costing the company billions of dollars.
According to an internal report cited by the Wall Street Journal, Amazon lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers, the Echo speakers are predominantly used for simple functions like setting alarms rather than for making purchases on Amazon.
A former Amazon executive expressed concerns, saying, “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 version of the Alexa voice assistant. However, some engineers at Amazon have expressed skepticism about whether this change will significantly impact the current situation.
An Amazon spokesperson emphasized that the company’s focus is on creating value through its services rather than solely on device sales. They noted that the Devices & Services division has successfully established several profitable ventures that are expected to continue thriving.
In a related development, Amazon’s new AI-driven Alexa, showcased in September, is reportedly not yet ready for deployment, according to former employees. The company is said to lack sufficient data and the necessary chips to support the large language model intended for the revamped virtual assistant. Additionally, Amazon has reportedly shifted priority towards enhancing its generative AI for its cloud computing arm, Amazon Web Services.
Amazon countered these claims, asserting that the information from former employees is inaccurate, and stated that its Artificial General Intelligence team has access to essential in-house Trainium chips and Nvidia GPUs. The company’s vision for Alexa remains unchanged: to develop the leading personal assistant in the industry.