Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. Between 2017 and 2021, the online retail giant lost more than $25 billion on its Echo, Kindle, and other devices, according to the Wall Street Journal, which cites internal documents and unnamed sources.
Despite having hundreds of millions of customers utilizing these devices, it appears that the Alexa-enabled Echo speakers are predominantly used for setting alarms and other free applications rather than for shopping on Amazon. A former senior Amazon employee expressed concerns, 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 seeking solutions, including the introduction of a paid version of the voice assistant. However, some of the engineers working on this initiative have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value delivered to customers 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, developments regarding Amazon’s new AI-powered Alexa, which was showcased in September, indicate that it may still be far from completion. Former employees have suggested that the company lacks sufficient data and access to the necessary chips to support the advanced language model underlying the new version of its virtual assistant. Reports also indicate that Amazon may have shifted its attention to advancing generative AI for its cloud division, Amazon Web Services.
In response to these claims, Amazon asserted that its former employees are misinformed about the advancements in Alexa AI, noting that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units. The company’s objective for Alexa remains unchanged: to create the world’s best personal assistant.