Amazon’s initiative to generate revenue from its Alexa-enabled devices has fallen short, reportedly resulting in billions of dollars in losses for the company. According to the Wall Street Journal, internal documents and sources close to the matter reveal that Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices from 2017 to 2021.
Despite having hundreds of millions of customers, the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms and utilizing free apps, rather than making purchases on Amazon. A former senior employee expressed concerns, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, CEO Andy Jassy is seeking solutions, with reports indicating the company plans to roll out a paid version of its voice assistant. Yet, some engineers working on this new iteration are skeptical about its potential impact.
An Amazon spokesperson stated, “We are focused on the value we create when customers use our services, not just when they buy our devices,” highlighting the profitability of its Devices & Services division and its confidence in future growth.
Additionally, concerns have arisen regarding the readiness of the newly developed AI-powered Alexa, which was demoed in September. Former employees suggest that the project lacks sufficient data and access to necessary technology. Amazon is reportedly prioritizing generative AI development for its cloud computing unit, Amazon Web Services, over the enhancement of Alexa.
Amazon responded by disputing claims made by former employees, asserting that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s objective for Alexa remains: “to build the world’s best personal assistant.”