Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly backfired, leading the company to lose billions. According to internal documents and sources familiar with the matter, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Although Amazon boasts hundreds of millions of customers for its devices, analytics suggest that users often utilize Alexa-enabled Echo speakers more for setting alarms and using free applications rather than making purchases on Amazon.
A former senior employee expressed concern over the company’s hiring practices, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In light of these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, with plans to introduce a paid version of its voice assistant. However, some engineers engaged in this project have expressed skepticism about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value created through customer engagement with services, as opposed to solely device sales. They noted that the Devices & Services division has established several profitable ventures for Amazon and is optimistic about future prospects.
Additionally, Amazon’s newly demoed AI-powered Alexa, unveiled in September, is reportedly not yet ready for deployment. Former employees claim the company lacks sufficient data and necessary chips for the large language model (LLM) that will drive the virtual assistant. Reports indicate that Amazon has shifted its priorities to focus on generative AI for its cloud computing platform, Amazon Web Services.
In response to the critiques, Amazon stated that claims made by former employees are inaccurate and that the Amazon Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company reiterated its commitment to its vision of developing the world’s leading personal assistant.