Amazon’s initiative to generate revenue from its Alexa-enabled devices has reportedly backfired, resulting in significant losses for the company. According to the Wall Street Journal, Amazon has incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the situation. Although Amazon boasts hundreds of millions of customers for its devices, its Echo speakers are mainly utilized for basic functions like setting alarms rather than facilitating purchases on the platform.
A former senior Amazon employee expressed concern about the efficiency of their investments, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to this challenge, Amazon CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in the development of this paid version are skeptical about its potential effectiveness.
An Amazon spokesperson clarified that the company is “focused on the value we create when customers use our services, not just when they buy our devices.” They emphasized that the Devices & Services organization has successfully established multiple profitable businesses and is poised for continued success.
On another front, Amazon’s new AI-driven Alexa, which was showcased in September, is reportedly far from completion, as per insights from former employees. The company currently lacks sufficient data and access to the necessary chips for the large language model (LLM) that will power the new assistant. Furthermore, Amazon has allegedly shifted its priorities towards developing generative AI for its cloud services division, Amazon Web Services.
In defense, Amazon stated that its former employees are misinformed regarding its AI efforts, asserting that the Amazon Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs. The company reiterated its commitment to its goal of creating the world’s best personal assistant.