Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly not succeeded, leading to significant financial losses for the company. According to a report from the Wall Street Journal, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the situation. Despite having hundreds of millions of customers using its devices, research suggests that users primarily use the Alexa-enabled Echo speakers for basic functions like setting alarms, rather than shopping on Amazon.
A former senior Amazon employee noted concerns about the company’s direction, 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 pursuing solutions, including a paid version of its voice assistant. However, some engineers working on this paid version have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value for customers through its services beyond just device sales, asserting that their Devices & Services division has successfully established several profitable operations and is positioned for future success.
In addition, Amazon’s new AI-powered version of Alexa, showcased in September, is reportedly still far from ready. Former employees claim the company lacks the necessary data and access to essential chips to support the large language model driving the new virtual assistant. Furthermore, it appears Amazon has shifted its priority to developing generative AI for its cloud computing branch, Amazon Web Services.
The company disputes claims made by former employees, stating they are misinformed regarding its ongoing Alexa AI projects. Amazon asserts that its Artificial General Intelligence team has adequate access to both their proprietary Trainium chips and Nvidia GPUs, with an unwavering commitment to building the world’s best personal assistant.