Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly backfired, resulting in significant losses for the company, totaling more than $25 billion from 2017 to 2021. This information comes from internal documents and sources acquainted with the situation, as reported by the Wall Street Journal.
Despite having hundreds of millions of customers for its devices, the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms and accessing free apps rather than for shopping on Amazon. One former senior employee expressed concern, 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 exploring a solution that includes launching a paid tier for Alexa. However, some engineers within the company are skeptical about whether this approach will effectively drive revenue.
An Amazon spokesperson remarked that the company emphasizes the value generated when customers utilize their services, rather than just the sale of devices. The Devices & Services division has successfully established several profitable ventures and remains optimistic about future prospects.
In another development, Amazon showcased a new AI-enhanced version of Alexa in September. However, former employees have indicated that the updated version is far from ready, lacking sufficient data and the necessary hardware to operate the advanced language model. Additionally, Amazon is said to have shifted its focus toward developing generative AI for its cloud computing segment, Amazon Web Services.
Amazon has countered claims made by former employees, asserting that they are misinformed about the company’s AI initiatives for Alexa. The company insists that its Artificial General Intelligence team has access to critical resources, including in-house Trainium chips and Nvidia GPUs, and remains committed to creating the best personal assistant in the market.