Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly failed, costing the company billions.
The online retail giant lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, according to the Wall Street Journal, which cited internal documents and unnamed sources. Despite having hundreds of millions of customers for its devices, Amazon’s Alexa-enabled Echo speakers are mainly used for setting alarms and other free apps rather than shopping on Amazon.
“We worried we’ve hired 10,000 people and we’ve built a smart timer,” a former senior Amazon employee told the Wall Street Journal.
Amazon CEO Andy Jassy is now seeking a solution, and the company is reportedly launching a paid tier of its voice assistant. However, some engineers working on the paid version of Alexa are concerned it won’t make a significant impact, according to sources quoted by the Wall Street Journal.
“We are focused on the value we create when customers use our services, not just when they buy our devices,” an Amazon spokesperson said in a statement shared with Quartz. “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In the meantime, Amazon’s new AI-powered Alexa, which was showcased in September, reportedly remains far from ready. Former employees have cited a lack of data and necessary chips to run the large language model powering the new version of Alexa, Fortune reported. Amazon has also reportedly shifted focus from AI-powered Alexa to developing generative AI for its cloud computing unit, Amazon Web Services.
Amazon refuted these claims, stating that its former employees are misinformed about its current Alexa AI initiatives. The company insisted that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. Amazon maintains that its goal for Alexa “remains the same — to build the world’s best personal assistant.”