Amazon’s strategy to generate revenue from its Alexa-enabled devices is reportedly not yielding the expected results, with the company estimated to have incurred losses exceeding $25 billion between 2017 and 2021, according to internal documents and sources cited by the Wall Street Journal. Despite having hundreds of millions of customers using its devices, many reportedly use the Alexa-enabled Echo speakers primarily for basic functions, such as setting alarms, rather than making purchases on Amazon.
A former senior employee highlighted concerns within the company, 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 exploring solutions, including a paid tier for the voice assistant. However, some engineers involved in the development of this paid version express doubts about its potential effectiveness.
An Amazon spokesperson defended the strategy, emphasizing that the company is focused on the value created when customers utilize their services, rather than solely on device sales. They noted that Amazon’s Devices & Services organization has successfully established numerous profitable ventures and is well-positioned to continue this trajectory.
On another front, the new AI-powered version of Alexa, showcased in September, is said by former employees to be far from ready. Reports indicate that the company lacks sufficient data and access to the necessary chips for operating the advanced language model behind the new assistant. Additionally, Amazon has reportedly shifted its focus towards generative AI development for its cloud computing branch, Amazon Web Services.
In response to these claims, Amazon refuted the assertions made by former employees, arguing that they are misinformed about the company’s ongoing initiatives. The company stated that the Amazon Artificial General Intelligence team has access to both its own Trainium chips and Nvidia GPUs, maintaining that its goal remains to create “the world’s best personal assistant.”