Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly not been successful, resulting in substantial financial losses for the company.
According to a report from the Wall Street Journal, Amazon lost over $25 billion on its devices, including the Echo and Kindle, from 2017 to 2021. Internal documents and sources familiar with the situation indicated that despite having hundreds of millions of customers, the Echo speakers are predominantly used for basic functions like setting alarms rather than making purchases on Amazon.
A former senior employee expressed concern regarding the situation, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in developing this paid version have reservations about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the overall value created through service usage rather than solely through device sales. They noted that the Devices & Services division has established numerous profitable businesses and expects to continue this trajectory.
On another front, reports have indicated that the newly introduced artificial intelligence-powered Alexa is far from ready. Former employees revealed that Amazon lacks sufficient data and access to necessary chips for running the large language model that would power this version of the assistant. It was also reported that the company has shifted its priorities towards building generative AI for its cloud computing division, Amazon Web Services.
In response to these critiques, Amazon stated that former employees are misinformed regarding its ongoing Alexa AI initiatives, assuring that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s commitment to developing “the world’s best personal assistant” remains unchanged.