Amazon’s initiative to generate revenue from its Alexa-enabled devices has not met expectations, reportedly resulting in losses amounting to billions for the company.
The online retail giant incurred over $25 billion in losses from 2017 to 2021 related to its Echo, Kindle, and other devices, as stated by the Wall Street Journal, which referenced internal documents and anonymous sources. Although Amazon has attracted hundreds of millions of customers for its devices, usage statistics indicate that many utilize Alexa-enabled Echo speakers primarily for simple tasks like setting alarms and accessing free applications, rather than for shopping.
A former senior Amazon employee expressed concerns about the company’s direction, noting, “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 exploring a solution by introducing a paid version of its voice assistant. However, some engineers involved in the development of this paid version are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s commitment to creating value through service usage rather than just device sales. “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward,” they stated.
On another front, Amazon’s new AI-powered version of Alexa, showcased in September, is said to be far from ready, according to former employees. The company is reportedly lacking sufficient data and the necessary chips to support the large language model that powers the new assistant. Additionally, Amazon has reportedly shifted its focus toward generative AI for its cloud computing service, Amazon Web Services.
Amazon has countered claims made by former employees, asserting that they are misinformed about the current state of its Alexa AI projects. The company maintains that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs, reaffirming its goal to develop “the world’s best personal assistant.”