Amazon’s strategy to profit from its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant lost over $25 billion between 2017 and 2021 from its Echo, Kindle, and other products. While Amazon boasts hundreds of millions of customers for these devices, it appears that the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms and accessing free apps rather than facilitating shopping on Amazon.
A former senior Amazon employee expressed concerns about the company’s approach, stating, “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 looking for solutions, including the launch of a paid version of its voice assistant. However, some engineers involved in the project have expressed skepticism about the potential effectiveness of this strategy.
An Amazon spokesperson commented on the situation, emphasizing that the focus remains on the value created through customer interactions with their services, not solely on device sales. They pointed out that the Devices & Services organization has successfully established various profitable businesses for Amazon and is well-situated to continue that trend.
Meanwhile, reports indicate that Amazon’s new AI-enhanced Alexa, showcased in September, may not be ready for deployment. Former employees have suggested that the company lacks sufficient data and access to the crucial hardware needed to run the advanced language model behind the updated virtual assistant. Additionally, it seems Amazon has shifted its attention away from AI for Alexa to prioritize generative AI development within its cloud computing division, Amazon Web Services.
In defense of its efforts, Amazon stated that its former employees might be misinformed regarding the current status of Alexa’s AI advancements. The company asserted that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs, reiterating its goal to develop what it intends to be the best personal assistant in the world.