Amazon’s efforts to profit from its Alexa-enabled devices have reportedly fallen short, costing the company billions. According to internal documents and sources familiar with the matter, Amazon lost over $25 billion between 2017 and 2021 due to its Echo, Kindle, and other devices. Although the company boasts hundreds of millions of customers for these gadgets, usage statistics indicate that the Alexa-enabled Echo speakers are primarily employed for setting alarms and utilizing free apps rather than making purchases on Amazon.
A former senior Amazon employee expressed concerns over the massive investment, remarking, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon’s CEO Andy Jassy is reportedly seeking solutions, with plans to introduce a paid tier for Alexa. However, some engineers involved in developing this version of the voice assistant have doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value created when customers use its services beyond just device purchases. They noted that the Devices & Services organization has generated numerous profitable ventures for Amazon and is well-positioned for future success.
Additionally, reports suggest that Amazon’s new AI-powered Alexa, which was showcased in September, is still not ready. Insiders claim the company lacks sufficient data and the necessary chips to support the large language model driving the updated virtual assistant. Moreover, Amazon has reportedly shifted priorities to develop generative AI for its cloud service, Amazon Web Services.
In response to these claims, Amazon asserted that the former employees are incorrect about its current AI initiatives, stating that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to building “the world’s best personal assistant.”