Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly resulted in significant financial losses, amounting to over $25 billion between 2017 and 2021, according to a report by the Wall Street Journal based on internal documents and sources familiar with the situation. Despite having hundreds of millions of customers for its devices, it seems that users primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms and using free applications, rather than engaging in shopping through Amazon.
A former high-ranking Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these challenges, CEO Andy Jassy is seeking solutions and is reportedly introducing a paid version of Alexa. However, some engineers involved in this new version have doubts about its potential impact.
An Amazon spokesperson provided a statement, emphasizing that the company is prioritizing the value generated from customer interactions with their services, rather than solely focusing on device sales. They noted that the Devices & Services organization has successfully established several profitable ventures and is positioned to continue that trajectory.
In addition, Amazon’s newly unveiled AI-powered version of Alexa, demonstrated in September, is reportedly not yet ready for launch, according to former employees. The company faces challenges with insufficient data and the lack of access to the necessary chips for the large language model (LLM) that underpins the new assistant. Additionally, Amazon has reportedly shifted its focus towards developing generative AI for its cloud computing sector, Amazon Web Services.
Responding to concerns, Amazon asserts that its previous employees are misinformed about the current status of its Alexa AI initiatives, claiming that the Amazon Artificial General Intelligence team has access to essential in-house Trainium chips and Nvidia GPUs. The company reaffirmed its commitment to its goal of creating the world’s best personal assistant.