Amazon’s efforts to generate revenue through its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company. According to internal documents and unnamed sources cited by the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers for its devices, it appears that the Echo speakers, powered by Alexa, are primarily being used for setting alarms and utilizing free apps rather than for making purchases on Amazon.
A former senior Amazon employee expressed concern, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” With this in mind, CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of the voice assistant. However, some engineers involved in this initiative are skeptical about its potential impact.
An Amazon spokesperson emphasized that the company is “focused on the value we create when customers use our services, not just when they buy our devices,” adding that the Devices & Services organization has successfully established various profitable ventures and is well-positioned for future growth.
In related news, Amazon’s new AI-powered version of Alexa, which was showcased in September, is reportedly not ready for release, according to former employees. The company is said to lack sufficient data and access to the necessary chips to operate the advanced language model that underpins the updated virtual assistant. Furthermore, Amazon is reportedly prioritizing generative AI development for its cloud computing segment, Amazon Web Services, over the AI-enhanced Alexa.
Amazon responded by stating that its former employees are mistaken and misinformed regarding its current advancements in Alexa AI. The company claimed that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia graphics processing units (GPUs), and reaffirmed its commitment to creating what it aspires to be the best personal assistant in the world.