Amazon’s strategy to generate revenue from its Alexa-enabled devices is reportedly falling short, resulting in substantial financial losses for the company. Internal documents indicate that between 2017 and 2021, Amazon lost over $25 billion related to its Echo, Kindle, and other devices, according to a report by the Wall Street Journal.
Despite the vast user base of hundreds of millions for its devices, Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms rather than for promoting purchases on Amazon. A former senior employee expressed concerns about the direction of their hiring and product development, questioning the effectiveness of their efforts.
In response to these challenges, Amazon CEO Andy Jassy is seeking solutions and is reportedly planning to introduce a paid version of its voice assistant. However, some engineers involved in this initiative are skeptical about its potential success.
An Amazon spokesperson emphasized that the company prioritizes the value generated from customer interactions with its services over device sales. They asserted that their Devices & Services division has already established several profitable ventures and is prepared to continue this trend.
On another note, reports suggest that Amazon’s new AI-enhanced Alexa, which was showcased in a recent demonstration, is far from being fully developed. Insiders claim the company lacks sufficient data and the necessary hardware to implement the advanced large language model driving the new assistant. Instead, Amazon has shifted focus toward enhancing generative AI for its cloud computing arm, Amazon Web Services.
In response, Amazon refuted the claims made by former employees, stating that the Amazon Artificial General Intelligence team has access to essential resources, including proprietary Trainium chips and Nvidia GPUs. The company reaffirmed its commitment to developing Alexa into “the world’s best personal assistant.”