Amazon’s initiative to profit from its Alexa-enabled devices has apparently backfired, resulting in substantial financial losses for the company, reportedly over $25 billion between 2017 and 2021, according to internal documents and sources familiar with the matter. Despite having hundreds of millions of customers using devices like the Echo and Kindle, the Alexa-enabled Echo speakers are primarily utilized for non-shopping functions, such as setting alarms, rather than driving sales 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 the situation, Amazon CEO Andy Jassy is seeking solutions, including the potential introduction of a paid subscription tier for Alexa. However, some engineers involved in developing this paid version are doubtful about its impact.
An Amazon spokesperson stated, “We’re focused on the value we create when customers use our services, not just when they buy our devices,” emphasizing that the Devices & Services division continues to establish profitable ventures that should carry on into the future.
In other developments, Amazon’s newly announced AI-powered Alexa, demonstrated recently, is reportedly far from completion. Former employees suggest the company lacks sufficient data and necessary technology to effectively implement the large language model driving the enhanced assistant. Furthermore, Amazon appears to have shifted its focus towards generative AI development for its cloud service, Amazon Web Services, sidelining the AI-enhanced Alexa.
Amazon has refuted claims made by former employees, asserting that the Amazon Artificial General Intelligence team has access to essential technology, including in-house Trainium chips and Nvidia GPUs. The company’s objective for Alexa remains clear: to create the world’s leading personal assistant.