Amazon’s strategy to profit from its Alexa-enabled devices has reportedly failed, resulting in a loss of over $25 billion between 2017 and 2021. This information comes from internal documents and sources familiar with the situation, as reported by the Wall Street Journal. Although Amazon boasts hundreds of millions of users for its devices, it appears that customers primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms, rather than for making purchases on Amazon.
A former senior employee expressed concern about the company’s hiring and development efforts, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In light of these challenges, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers working on this version of Alexa have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value created through its services, not solely through device sales, asserting that the Devices & Services organization has created several profitable ventures and remains well-positioned for future growth.
Additionally, Amazon’s new AI-enhanced Alexa, recently showcased in September, is reportedly not ready for deployment, according to former employees. The company is said to lack sufficient data and access to the necessary chips for the large language model driving the next iteration of its virtual assistant. Furthermore, Amazon has reportedly shifted focus towards developing generative AI for its cloud computing arm, Amazon Web Services.
In response to these claims, Amazon defended its AI efforts, stating that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs). The company maintains that its goal for Alexa is unchanged: to create the best personal assistant in the world.