Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. While Amazon boasts hundreds of millions of users for its devices, the majority reportedly use Alexa-enabled Echo speakers primarily for simple tasks like setting alarms rather than for shopping.
One former senior Amazon employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, including the potential launch of a paid tier for its voice assistant. However, some engineers involved in the development of this paid version have expressed doubts about its effectiveness.
An Amazon spokesperson emphasized the company’s focus on the overall value created when customers use their services, rather than solely on device sales. The spokesperson noted that the Devices & Services organization has established several profitable ventures for Amazon and is poised for future success.
Additionally, the new artificial intelligence-driven version of Alexa, showcased in September, is reportedly not yet ready, according to former employees. The company is said to lack sufficient data and access to the necessary chips to operate the large language model for this upgraded assistant. Moreover, Amazon appears to be prioritizing its generative AI efforts for its cloud computing division, Amazon Web Services, over the development of AI-integrated Alexa.
In response to these claims, Amazon stated that former employees are misinformed regarding its current AI initiatives, affirming that the Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company maintains that its objective for Alexa is to build “the world’s best personal assistant.”