Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to the Wall Street Journal, internal documents reveal that Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Although the company has amassed hundreds of millions of customers for these devices, the Echo speakers are primarily utilized for basic functions like setting alarms rather than facilitating purchases on Amazon.
A former senior employee expressed concern, 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 exploring solutions, including the introduction of a paid version of its voice assistant. However, sources indicated that some engineers working on this upgraded Alexa version are skeptical about its potential impact.
An Amazon spokesperson emphasized that the company is dedicated to creating value for customers, not just through device sales, noting that its Devices & Services division has successfully established profitable ventures and is well-positioned for future growth.
On another front, Amazon’s new AI-driven version of Alexa, showcased in September, is reportedly not ready for launch, according to former employees. They claimed the company lacks sufficient data and access to the necessary chips to support the advanced language model behind the new assistant. Furthermore, Amazon has allegedly pivoted its focus toward generative AI development for its cloud unit, Amazon Web Services.
In response to these allegations, Amazon stated that the insights from former employees are inaccurate and that the Amazon Artificial General Intelligence team has the necessary resources, including proprietary Trainium chips and Nvidia GPUs. The company’s goal for Alexa is to create the leading personal assistant on the market.