Amazon’s strategy to profit from its Alexa-enabled devices has reportedly backfired, resulting in substantial financial losses for the company. According to a report from the Wall Street Journal, Amazon incurred losses exceeding $25 billion between 2017 and 2021 from its Echo, Kindle, and other devices, based on internal documents and sources familiar with the company’s operations. Although Amazon has attracted hundreds of millions of customers for its devices, the Echo speakers are primarily utilized for basic tasks like setting alarms rather than facilitating purchases on Amazon.
A former senior employee expressed concerns, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” CEO Andy Jassy is now seeking solutions and is reportedly introducing a paid version of the voice assistant. However, some engineers have raised doubts about the potential success of this new offering.
An Amazon spokesperson emphasized that the company prioritizes the value created from its services, rather than solely focusing on device sales. They insisted that Amazon’s Devices & Services division has successfully established several profitable ventures and remains well-positioned for future growth.
In related news, Amazon’s new AI-driven version of Alexa, showcased in September, is allegedly far from being ready for deployment, according to reports from former employees. The company reportedly lacks sufficient data and the necessary chips to effectively run the large language model intended for the assistant. Additionally, it seems that Amazon is shifting its focus toward developing generative AI for its cloud business, Amazon Web Services, rather than prioritizing the new AI Alexa.
In response to these claims, Amazon contended that its former employees are misinformed about the company’s AI initiatives for Alexa, clarifying that the Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia graphics processing units. They reiterated their commitment to building “the world’s best personal assistant.”