Amazon’s efforts to generate revenue from its Alexa-enabled devices have fallen short, leading to significant financial losses for the company. According to reports from the Wall Street Journal, Amazon has lost over $25 billion on products like Echo and Kindle between 2017 and 2021, based on internal documents and insights from anonymous sources.
Despite boasting hundreds of millions of customers, many users reportedly utilize Alexa-enabled Echo speakers mainly for basic functions such as setting alarms, rather than making purchases on Amazon. A former senior employee expressed concern over the investment in hiring thousands of staff and creating features that do not contribute to revenue generation.
In response to these challenges, CEO Andy Jassy is exploring solutions, including the introduction of a paid version of Alexa. However, some engineers have voiced skepticism about its potential effectiveness.
An Amazon spokesperson defended the company’s approach, emphasizing its focus on delivering value through its services rather than solely through device sales. They highlighted that the Devices & Services division has created various profitable businesses and is poised for future growth.
On another front, Amazon’s new AI-driven version of Alexa, which was showcased in September, faces hurdles in its development. Former employees have suggested that the technology is not ready for deployment due to insufficient data and a lack of necessary chips for the AI model. Furthermore, Amazon is reportedly shifting its priority towards generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon has stated that such former employees are misinformed about the current progress of Alexa AI, asserting that the Amazon Artificial General Intelligence team has access to the needed hardware resources. The organization’s objective remains to develop a leading personal assistant.