Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses. According to a report from the Wall Street Journal, the online retail giant has incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the situation. Although Amazon has amassed hundreds of millions of customers for its devices, the usage of its Alexa-enabled Echo speakers is predominantly for setting alarms and using free applications rather than shopping on Amazon.
A former senior Amazon employee expressed concerns about the company’s investment, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon’s CEO Andy Jassy is reportedly seeking solutions and planning to introduce a paid tier for the voice assistant. However, some engineers involved in developing this paid version are skeptical about its potential impact, as indicated by the Wall Street Journal.
An Amazon spokesperson emphasized that the company aims to enhance the value created when customers use its services, rather than solely focusing on device sales. They mentioned that the Devices & Services organization has successfully established various profitable ventures for Amazon and is well-positioned for future success.
On another front, Amazon’s new AI-powered version of Alexa, showcased in September, is reportedly far from completion, according to former employees. The company is said to lack sufficient data and access to the necessary chips to operate the large language model driving the new assistant. Furthermore, Amazon has reportedly shifted its focus from AI-powered Alexa to prioritizing generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon has stated that its former employees are misinformed regarding the current state of Alexa’s AI development. The company asserts that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, reaffirming its commitment to building the best personal assistant in the world.