Amazon’s strategy to profit from its Alexa-enabled devices has reportedly resulted in significant losses, amounting to billions of dollars. The Wall Street Journal, referencing internal documents and sources familiar with the situation, noted that from 2017 to 2021, the company lost over $25 billion on products such as Echo and Kindle. Despite having hundreds of millions of users, Alexa-enabled devices are primarily utilized for basic functions like setting alarms and using free apps, rather than for shopping on Amazon.
A former senior employee expressed concerns over the lack of return on investment, stating that the company had hired thousands of people to effectively create a smart timer. In response, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in this project have voiced skepticism about its potential success.
An Amazon spokesperson stated that the company prioritizes the value created from customer interactions with its services, rather than solely focusing on device sales. The spokesperson emphasized that the Devices & Services division has established several profitable businesses and expects to continue this trend.
In addition, Amazon’s new AI-enhanced version of Alexa, showcased in September, is allegedly not yet ready, according to former employees. Reports indicate that the company lacks sufficient data and the necessary chips to support the new large language model. Furthermore, it has shifted its focus on developing generative AI for its cloud computing segment, Amazon Web Services.
Amazon challenged the accuracy of its former employees’ comments regarding its AI initiatives, claiming that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company maintains that its objective remains to create the world’s best personal assistant.