Amazon’s strategy to profit from its Alexa-enabled devices has reportedly fallen short, resulting in substantial financial losses for the company. From 2017 to 2021, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices, according to the Wall Street Journal, which cited internal documents and unnamed sources.
Despite having hundreds of millions of customers, it appears that many consumers primarily use Alexa-enabled Echo speakers for basic functions like setting alarms rather than for shopping through Amazon. A former senior Amazon employee expressed concerns about the situation, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to this ongoing issue, Amazon’s CEO Andy Jassy is reportedly seeking solutions, including the launch of a paid version of its voice assistant. However, some engineers working on this new paid version have voiced doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value for customers using its services, rather than merely selling devices. The spokesperson noted that Amazon’s Devices & Services division has successfully established several profitable ventures and is poised to continue this trend.
On another front, the company showcased a new AI-driven version of Alexa in September. Yet, former employees have claimed that this advanced version is far from ready due to a lack of necessary data and access to the appropriate chips for running the large language model. Reports indicate that Amazon has shifted its priorities to developing generative AI for its cloud computing branch, Amazon Web Services, rather than advancing the AI functionality of Alexa.
In response to the criticisms from former employees, Amazon asserted that these individuals lack accurate information regarding its ongoing AI initiatives and claimed that its Artificial General Intelligence team has access to the essential in-house Trainium chips as well as Nvidia graphics processing units. The company’s goal with Alexa remains clear: to develop the world’s best personal assistant.