Amazon’s efforts to generate revenue from its Alexa-enabled devices have reportedly resulted in significant financial losses, amounting to over $25 billion between 2017 and 2021. Internal documents and sources familiar with the matter, as reported by the Wall Street Journal, indicate that the retail giant’s Echo, Kindle, and other devices have not lived up to profit expectations.
Despite having hundreds of millions of customers, many users primarily utilize Alexa-enabled Echo speakers for basic functions like setting alarms, rather than for shopping on Amazon. A former senior employee expressed concerns about the lack of innovation, stating, “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 solutions, including the introduction of a paid tier for the Alexa service. However, some engineers involved in the project’s development have raised doubts about its effectiveness.
An Amazon spokesperson stated that the company is concentrating on the value created through its services rather than solely focusing on device sales. The spokesperson added that the Devices & Services division has established many profitable ventures for the company and is equipped to continue doing so.
Further complicating matters, Amazon’s plans for a new artificial intelligence-enhanced version of Alexa have faced setbacks, with former employees suggesting the project is not close to completion. Allegedly, Amazon lacks the necessary data and access to the computational resources required for the advanced language model. Reports indicate that the company may have shifted its priorities to focus on generative AI for its cloud computing division, Amazon Web Services.
In response to these assertions, Amazon refuted claims from former employees, asserting that its Artificial General Intelligence team has appropriate access to in-house Trainium chips and Nvidia GPUs, and reaffirmed its commitment to developing “the world’s best personal assistant” with Alexa.