Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly been unsuccessful, resulting in the company losing billions of dollars. From 2017 to 2021, Amazon incurred losses exceeding $25 billion on its Echo, Kindle, and other devices, according to internal documents and sources familiar with the situation.
Despite having hundreds of millions of customers for its devices, the Alexa-enabled Echo speakers are primarily used for simple tasks such as setting alarms and utilizing free applications rather than for shopping on Amazon. A former senior employee expressed concern over the investment made, commenting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to this financial setback, Amazon CEO Andy Jassy is exploring solutions, including a new paid version of the voice assistant. However, some engineers involved in the development of the paid Alexa are skeptical that it will significantly change the current situation.
An Amazon spokesperson stated, “We focus on the value we create when customers use our services, not just when they buy our devices.” The spokesperson emphasized that the Devices & Services division has established several profitable ventures for the company and is well-positioned for future growth.
Additionally, the new artificial intelligence-enhanced Alexa, which was showcased in September, is not expected to be ready soon, according to former employees. They claimed that Amazon lacks sufficient data and access to the necessary chips for running the large language model that powers the upgraded assistant. The company has also reportedly shifted its focus to developing generative AI for its cloud computing arm, Amazon Web Services.
Amazon refuted claims made by its former employees, asserting that they are misinformed regarding its current AI initiatives. The company claims that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs). Amazon affirmed its commitment to its original plan for Alexa, stating, “to build the world’s best personal assistant.”