Amazon’s strategy to generate revenue through its Alexa-enabled devices appears to be failing, costing the company billions, according to recent reports. From 2017 to 2021, the online retail giant incurred losses exceeding $25 billion on its Echo, Kindle, and other devices, as revealed by internal documents and sources familiar with the situation.
Despite having millions of customers, many users reportedly utilize Alexa-enabled Echo speakers primarily for basic tasks like setting alarms, rather than for making purchases on Amazon. A former senior employee expressed concerns about the significant investment in staffing and resources that has not yielded corresponding results.
In response, Amazon’s CEO Andy Jassy is exploring solutions, including the introduction of a paid subscription tier for the voice assistant. However, some engineers involved in developing this paid version have expressed skepticism about its potential impact.
An Amazon spokesperson emphasized the company’s commitment to delivering value through its services beyond just device sales, asserting that the Devices & Services division has successfully established profitable ventures and is poised for future success.
In another development, Amazon’s newly unveiled AI-powered Alexa, showcased in September, reportedly remains underprepared according to former employees, who claim the company lacks sufficient data and the necessary chips to support the new model. Furthermore, Amazon has allegedly shifted its focus towards advancing generative AI for its cloud computing platform, Amazon Web Services.
Amazon refuted claims from its former employees, asserting that they are misinformed regarding the current state of Alexa’s AI capabilities and that the Amazon Artificial General Intelligence team has access to essential resources, including in-house chips and Nvidia GPUs. The company’s objective remains clear: to create the world’s leading personal assistant.