Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly backfired, resulting in losses exceeding $25 billion from 2017 to 2021. According to a report by the Wall Street Journal, internal documents and sources familiar with the matter reveal that despite having hundreds of millions of customers, the company’s Echo speakers are primarily used for setting alarms and accessing free apps rather than for shopping.
A former senior employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In an effort to turn things around, Amazon CEO Andy Jassy is exploring the introduction of a paid version of its voice assistant. However, some engineers involved in the development of this upgrade have expressed doubts about its potential impact.
An Amazon spokesperson emphasized that the company focuses on the value generated from services provided to customers rather than solely on device sales. The spokesperson noted, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In addition, Amazon’s new AI-powered version of Alexa, which was showcased in September, reportedly is not ready for launch, as indicated by former employees. They pointed out that the company lacks sufficient data and access to the necessary chips for the advanced language model underlying the new assistant. Moreover, Amazon is prioritizing the development of generative AI for its cloud service, Amazon Web Services, over the AI-powered Alexa.
In response to these claims, Amazon defended its current AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to essential resources, including in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to its goal of creating “the world’s best personal assistant.”