Amazon’s strategy to profit from its Alexa-enabled devices is reportedly faltering, leading to significant financial losses for the company. According to internal documents and sources familiar with the situation, Amazon lost more than $25 billion from devices like Echo and Kindle between 2017 and 2021. Despite having hundreds of millions of customers using these devices, it appears that many users primarily utilize the Alexa-enabled Echo speakers for basic functions like setting alarms instead of making purchases on Amazon.
A former high-ranking Amazon employee remarked on the situation, highlighting concerns about the hiring of thousands of individuals and the focus on developing features that may not generate revenue. In response, Amazon CEO Andy Jassy is exploring solutions, including the introduction of a subscription model for the voice assistant. However, some engineers involved in creating the paid version of Alexa are skeptical about its potential success.
An Amazon spokesperson emphasized the company’s commitment to creating value through its services beyond simply selling devices. They noted that the Devices & Services division has developed several profitable ventures and is well-positioned for future success.
Additionally, concerns have emerged regarding Amazon’s new AI-powered version of Alexa, which was showcased in September. Former employees indicated that the project is far from ready due to insufficient data and limited access to the advanced chips necessary for operating the large language model (LLM) behind the new assistant. Reports suggest that Amazon has shifted its priority towards generative AI for its cloud computing division, Amazon Web Services.
In response to these criticisms, Amazon stated that former employees lack an accurate understanding of its current AI initiatives and confirmed that its Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia graphics processing units (GPUs). The company’s objective for Alexa remains unchanged: to develop the world’s leading personal assistant.