Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, leading to substantial financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant lost more than $25 billion on devices like the Echo and Kindle between 2017 and 2021.
Despite boasting hundreds of millions of customers for these devices, the use of Alexa-enabled Echo speakers appears to be limited mainly to basic functions like setting alarms and using free applications, rather than facilitating shopping on Amazon.
A former senior employee expressed concerns about the effectiveness of the investment, stating, “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 reportedly exploring the launch of a paid tier for its voice assistant. However, some engineers working on this version have voiced skepticism regarding its potential impact.
An Amazon spokesperson emphasized the company’s focus on delivering value through its services, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
Additionally, reports indicate that Amazon’s new AI-powered version of Alexa is still in nascent stages, lacking sufficient data and necessary chips to operate the large language model that would enhance the virtual assistant. The company has shifted some focus towards generative AI development for its cloud computing sector, Amazon Web Services.
In response to the criticisms from former employees, Amazon contended that their perspectives are inaccurate and stated that its Artificial General Intelligence team has access to the required Trainium chips and Nvidia GPUs to aid in the development of the new Alexa. The overall objective remains to create the world’s best personal assistant, according to the company.