Amazon’s efforts to generate revenue from its Alexa-enabled devices have reportedly resulted in significant financial losses, amounting to billions for the company.
According to a report from the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021. This information comes from internal documents and sources familiar with the company’s operations. While the company boasts hundreds of millions of customers using its devices, the Alexa-enabled Echo speakers are primarily used for functions like setting alarms and accessing free applications rather than for shopping.
A former senior employee mentioned to the Wall Street Journal, “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 the introduction of a paid subscription tier for Alexa. However, some engineers working on this project have expressed concerns that it may not significantly change the current situation.
An Amazon spokesperson emphasized that the company’s focus is on the value delivered to customers through its services, rather than solely on device sales. They noted that the Devices & Services organization has successfully established several profitable ventures and is well-positioned for future growth.
Additionally, Amazon’s recent advancements in artificial intelligence for Alexa, demonstrated in September, are said to be far from complete, based on feedback from former employees. The company reportedly lacks sufficient data and the necessary technology to support the large language model intended for the new version of its virtual assistant. Furthermore, Amazon has shifted its focus toward developing generative AI for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon disputed the accuracy of former employee statements, asserting that its Artificial General Intelligence team has access to both its proprietary Trainium chips and Nvidia GPUs, and that its goals for Alexa remain focused on creating the best personal assistant available.