Amazon’s initiative to generate revenue from its Alexa-enabled devices has reportedly been unsuccessful, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant has suffered over $25 billion in losses related to its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon boasts hundreds of millions of customers for its products, usage data indicates that many Alexa-enabled Echo speakers are primarily utilized for tasks like setting alarms and accessing free applications, rather than facilitating purchases on Amazon.
A former senior Amazon employee expressed concerns, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, including the potential launch of a paid tier for the voice assistant. However, some engineers at Amazon are skeptical about the paid version of Alexa, fearing it may not significantly boost revenue.
An Amazon spokesperson stated, “We are focused on the value we create when customers use our services, not just when they buy our devices.” The company claims its Devices & Services division has established several profitable ventures and is well-positioned to continue this trend.
In addition, Amazon’s new AI-powered Alexa, which was showcased in September, is reportedly far from completion. Former employees have indicated that the company lacks sufficient data and the necessary chips to support the large language model driving the new version of the virtual assistant. Furthermore, Amazon has shifted its focus towards developing generative AI for its cloud computing division, Amazon Web Services.
Amazon disputes the claims made by former employees regarding its AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company reiterated its commitment to its vision, stating that its plan for Alexa remains unchanged: to build the world’s best personal assistant.