Amazon’s efforts to profit from its Alexa-enabled devices have reportedly resulted in significant financial losses, totaling over $25 billion from 2017 to 2021, according to internal documents and sources cited by the Wall Street Journal. Despite having hundreds of millions of customers using devices such as the Echo and Kindle, it appears that many users utilize Alexa for simple tasks like setting alarms rather than for shopping on Amazon.
A former senior employee expressed concern about the direction of the company’s strategy, highlighting that the workforce had expanded significantly while the functionality of these smart devices had not evolved substantially. In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, which may include the introduction of a paid version of Alexa. However, some engineers involved in the project are skeptical about its potential success.
Amazon maintains that it prioritizes creating value for users of its services, beyond just device sales. A representative stated that the Devices & Services division has successfully established several profitable segments and is well-positioned for the future.
In addition, Amazon’s new AI-enhanced version of Alexa, unveiled in September, is reportedly far from ready, according to former employees. Challenges such as insufficient data and a lack of access to necessary computing power for the large language model have hindered progress. The company has also shifted focus toward developing generative AI for its cloud computing subsidiary, Amazon Web Services.
Amazon rebuffed claims from its former employees, asserting that they are misinformed about the state of its AI initiatives. The company emphasized that its Artificial General Intelligence team is equipped with both proprietary Trainium chips and Nvidia GPUs, with the goal of creating the world’s best personal assistant.