Amazon’s strategy to profit from its Alexa-enabled devices has backfired, resulting in significant financial losses for the company, which amount to over $25 billion from 2017 to 2021, according to a report by the Wall Street Journal based on internal documents and sources familiar with the situation. Although Amazon has attracted hundreds of millions of customers to its product lineup, usage of Alexa-enabled Echo devices appears to be limited primarily to functions like setting alarms rather than generating sales for the retail giant.
A former senior employee expressed concerns about the company’s hiring spree of 10,000 individuals, questioning the effectiveness of the technology developed. In response to the setbacks, Amazon CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid subscription option for the voice assistant. However, some engineers involved in this initiative harbor doubts about its potential impact.
An Amazon spokesperson clarified that the company prioritizes the overall value offered through its services rather than solely focusing on hardware sales, highlighting that its Devices & Services division has a track record of establishing profitable ventures.
In addition, Amazon’s new AI-enhanced version of Alexa, showcased in September, is reportedly facing delays and challenges. Former employees indicate that the company lacks sufficient data and crucial chips necessary for operating the large language model (LLM) intended for the upgraded assistant. Reports suggest that Amazon is redirecting its focus towards developing generative AI for its cloud computing sector, Amazon Web Services, rather than prioritizing the revamped Alexa.
In response to criticism, Amazon has refuted claims from former employees about its AI initiatives, asserting that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reaffirms its commitment to developing what it aims to be the world’s leading personal assistant.