Amazon’s strategy to profit from its Alexa-enabled devices has backfired, leading to significant financial losses. Reports indicate that the online retail giant lost over $25 billion between 2017 and 2021 due to its Echo, Kindle, and other devices, according to internal documents and sources familiar with the situation. Despite having hundreds of millions of users, the Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms and using free applications, rather than for making purchases on Amazon.
Concerned about the situation, former Amazon employees expressed that the company may have overemphasized workforce growth, with one remarking, “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 new solutions, including the introduction of a paid version of its voice assistant. However, some engineers working on this project have voiced doubts about its potential efficacy.
An Amazon spokesperson stated that the company is concentrating on the value generated from customer interactions with its services, beyond just the sale of devices. They pointed out that the Devices & Services organization has created several profitable ventures for the company and is poised for future success.
Additionally, Amazon’s enhanced AI-powered version of Alexa, unveiled in September, is reportedly not yet ready for deployment. Former employees have noted a lack of sufficient data and the necessary chips for running the large language model that underpins the new AI assistant. Furthermore, it has been suggested that the company has shifted its focus toward developing generative AI for Amazon Web Services, rather than prioritizing the new Alexa.
In reaction to these claims, Amazon has asserted that its former employees are misinformed about the current state of Alexa’s AI initiatives. The company insists that its Artificial General Intelligence team has access to essential resources, including in-house Trainium chips and Nvidia GPUs, maintaining that its objective remains to develop “the world’s best personal assistant.”