Amazon’s strategy to generate revenue through its Alexa-compatible devices appears to be faltering, with reports indicating that the company has incurred losses exceeding $25 billion from its Echo, Kindle, and other products between 2017 and 2021, according to the Wall Street Journal. Internal documents and anonymous sources highlighted that despite having hundreds of millions of customers, Alexa-enabled Echo speakers are predominantly used for basic functions like setting alarms and utilizing free applications, rather than for shopping on Amazon.
A former senior employee expressed concerns about the company’s hiring decisions, 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 tier for its voice assistant. However, some engineers involved in the development of this paid version are reportedly skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s aim to deliver value from its services beyond just device sales, asserting that its Devices & Services division has successfully established various profitable ventures that will continue to thrive.
Additionally, Amazon’s newly unveiled AI-powered version of Alexa, revealed in September, is reportedly facing significant hurdles, with former employees stating that the company lacks sufficient data and access to the necessary chips for its large language model. Furthermore, it has been reported that Amazon has shifted its focus away from the AI version of Alexa to concentrate on developing generative AI for its Amazon Web Services cloud computing segment.
In response, Amazon contends that the claims from former employees regarding its AI initiatives are incorrect, maintaining that its Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs. The company insists that its objective for Alexa remains unchanged: to create the world’s premier personal assistant.