Amazon’s strategy to profit from its Alexa-enabled devices has proven to be costly, with the company reportedly losing billions of dollars. According to internal documents and sources familiar with the situation cited by the Wall Street Journal, Amazon faced losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon boasts hundreds of millions of customers using its devices, the Alexa-enabled Echo speakers appear to be primarily utilized for basic tasks like setting alarms rather than facilitating purchases on Amazon’s platform.
A former senior employee expressed concerns about the direction of the Alexa initiative, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, Amazon CEO Andy Jassy is seeking solutions, including the launch of a paid version of its voice assistant. However, there are apprehensions among engineers regarding the potential effectiveness of this new offering.
An Amazon spokesperson commented that the company prioritizes the value created from customer interactions with its services, beyond just device sales. They added that the Devices & Services division has successfully established various profitable ventures for Amazon and anticipates continued success.
In the meantime, Amazon’s newly introduced AI-powered version of Alexa, which was showcased in September, reportedly faces significant readiness issues according to former employees. There are concerns over insufficient data and a lack of access to the necessary chips for running the large language model (LLM) driving this advanced assistant. Additionally, Amazon has allegedly shifted its focus towards enhancing generative AI capabilities within its cloud computing division, Amazon Web Services.
In response to these claims, Amazon asserted that its former employees are misinformed about the current status of its Alexa AI initiatives, stating that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s overarching goal for Alexa remains unchanged: to develop the world’s leading personal assistant.