Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company.
According to internal documents and sources familiar with the situation, the online retail giant has incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. While Amazon boasts hundreds of millions of customers using its devices, the Alexa-enabled Echo speakers are primarily utilized for functions like setting alarms and accessing free apps rather than facilitating purchases on Amazon.
A former senior Amazon employee expressed concerns, saying, “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 seeking solutions, including the introduction of a paid tier for its voice assistant. However, some engineers working on the paid version of Alexa remain skeptical about its potential impact.
An Amazon spokesperson commented, “We’re focused on the value we create when customers use our services, not just when they buy our devices. Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In addition, the company unveiled a new artificial intelligence-enhanced version of Alexa in September, but former employees indicated that it is not ready for deployment. Reports suggest Amazon lacks sufficient data and access to the necessary chips for the large language model that will support the updated virtual assistant. The company has also reportedly prioritized generative AI development for its cloud computing service, Amazon Web Services, over advancements in AI for Alexa.
Amazon refuted claims made by former employees, insisting they are misinformed regarding the company’s current AI initiatives. The Amazon Artificial General Intelligence team is said to have access to both in-house Trainium chips and Nvidia graphics processing units (GPUs). The company’s commitment to developing “the world’s best personal assistant” remains unchanged.