Amazon’s strategy to generate revenue from its Alexa-enabled devices has not yielded the expected results, resulting in losses amounting to billions for the company. According to reports from the Wall Street Journal, internal documents reveal that Amazon lost more than $25 billion on devices such as Echo and Kindle from 2017 to 2021. Despite having hundreds of millions of customers using these devices, it appears that many use the Alexa-enabled Echo speakers primarily for setting alarms and accessing free applications, rather than for shopping on Amazon.
A former senior Amazon employee expressed concerns about the company’s focus, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” The situation has led Amazon’s CEO, Andy Jassy, to seek solutions, including the introduction of a paid version of the voice assistant. However, sources within the company have indicated that some engineers doubt the effectiveness of this initiative.
An Amazon spokesperson emphasized the importance of the value created for customers when using their services, beyond just sales of devices. They stated that the Devices & Services organization has successfully established several profitable business ventures and is positioned to continue this trend.
In addition, Amazon’s new AI-enhanced version of Alexa, showcased in September, is reportedly still underdeveloped, with former employees raising concerns regarding the lack of necessary data and access to essential chips for the large language model that drives this new assistant. Furthermore, it has been suggested that Amazon is shifting focus from AI-powered Alexa to enhancing generative AI capabilities within its cloud computing division, Amazon Web Services.
In response, Amazon contests the claims made by former employees, asserting that its Artificial General Intelligence team has access to both Trainium chips and Nvidia GPUs. The company maintains its commitment to developing what it aims to become the world’s leading personal assistant.