Amazon’s ambitions to generate revenue from its Alexa-enabled devices have reportedly fallen short, leading to significant financial losses for the company.
The online retail giant reportedly lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, as stated in an article by the Wall Street Journal, drawing on internal documents and sources familiar with the situation. Although Amazon boasts hundreds of millions of customers for its devices, research indicates that many users primarily employ Alexa-enabled Echo speakers for basic functions, such as setting alarms, rather than making purchases through Amazon.
A former senior Amazon employee expressed concerns by stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” reflecting on the company’s hiring and investment strategies.
In response to these challenges, Amazon CEO Andy Jassy is seeking solutions, reportedly considering the launch of a paid version of Alexa. However, some engineers involved in the project have expressed skepticism about its potential effectiveness, according to sources.
An Amazon spokesperson emphasized the company’s commitment to delivering value beyond just device sales, stating, “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
In the meantime, the company’s newly introduced AI-powered Alexa, showcased in September, is reportedly not yet ready for launch, according to former employees. The company faces challenges in acquiring sufficient data and the necessary chips to support the new large language model that would enhance its virtual assistant. Additionally, it is said that Amazon has shifted its focus to developing generative AI for its cloud services division, Amazon Web Services.
Amazon has countered claims from its former employees, asserting that they lack accurate information regarding current Alexa AI initiatives. The company noted that its Artificial General Intelligence team has access to in-house Trainium chips and Nvidia GPUs, reaffirming its commitment to building an advanced personal assistant.