Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly faltered, leading to significant financial losses for the company. According to the Wall Street Journal, internal documents and sources indicate that Amazon lost over $25 billion on devices such as the Echo and Kindle between 2017 and 2021. Although Amazon boasts hundreds of millions of customers for these devices, it appears that users primarily utilize the Echo speakers for basic functions like setting alarms and accessing free apps, rather than for shopping on Amazon.
A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In light of these issues, Amazon CEO Andy Jassy is seeking solutions, including the introduction of a paid version of the Alexa voice assistant. However, some engineers fear this move may not significantly alter the trajectory of Alexa’s performance.
An Amazon spokesperson emphasized the company’s focus on the value delivered to customers through its services, asserting that the Devices & Services division has created numerous profitable ventures and is well-positioned for future success.
In the meantime, Amazon’s newly introduced AI-enhanced Alexa, showcased in September, is reportedly not ready for deployment. Former employees claim the company lacks sufficient data and access to the necessary hardware to operate the advanced language model required for this new iteration. Furthermore, Amazon has shifted its priorities to developing generative AI for its cloud computing branch, Amazon Web Services, potentially sidelining the AI-powered Alexa project.
Amazon has countered these claims, insisting that former employees are misinformed about its current efforts with Alexa AI. The company stated that its Artificial General Intelligence team has access to both its own Trainium chips and Nvidia GPUs, reaffirming its commitment to creating “the world’s best personal assistant.”