Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company, totaling over $25 billion between 2017 and 2021. According to internal documents and sources familiar with the situation, the online retail giant’s various devices, including Echo and Kindle, have not contributed to sales as anticipated. Instead, many users primarily utilize the Echo speakers for basic functions such as setting alarms rather than for making purchases on Amazon.
A former senior employee expressed concerns about the company’s direction, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” Amid these challenges, CEO Andy Jassy is exploring solutions, including a potential paid version of Alexa. However, some engineers are skeptical about whether this initiative will make a significant impact.
An Amazon spokesperson emphasized the company’s commitment to delivering value through its services beyond device sales, noting that its Devices & Services division has established several profitable ventures and is poised for future success.
However, complications arise regarding Amazon’s new AI-driven Alexa. Former employees suggest the technology is far from ready, lacking sufficient data and necessary chip resources to support the advanced language model. Additionally, reports indicate that Amazon has shifted focus from the AI-powered Alexa to prioritize generative AI for its cloud computing branch, Amazon Web Services.
In response to these claims, Amazon maintains that its former employees are misinformed about the progress of its Alexa AI initiatives and asserts that the Amazon Artificial General Intelligence team has access to essential hardware, including in-house Trainium chips and Nvidia GPUs. The company reiterated its intention to develop “the world’s best personal assistant.”