Amazon’s ambition to generate revenue through its Alexa-enabled devices has reportedly fallen short, reportedly costing the company billions of dollars.
According to internal documents and sources familiar with the situation, the online retail giant lost over $25 billion on its Echo, Kindle, and other devices from 2017 to 2021. While Amazon has attracted hundreds of millions of customers to its devices, its Alexa-enabled Echo speakers are primarily used for setting alarms and utilizing various free applications, rather than for shopping on Amazon.
A former senior Amazon employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response, Amazon CEO Andy Jassy is now seeking solutions to the issue, and the company is reported to be launching a paid tier for its voice assistant. However, some engineers involved in developing the paid version of Alexa are skeptical about its potential effectiveness.
An Amazon spokesperson highlighted the company’s focus on the value created for customers through its services, 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.”
Meanwhile, the new AI-enhanced Alexa that Amazon showcased in September is reportedly not yet ready for deployment, according to former employees. Challenges arise from a lack of sufficient data and the necessary chips to support the new large language model powering the upgraded virtual assistant. Additionally, it seems Amazon has shifted its priorities, focusing on generative AI development for its cloud computing division, Amazon Web Services.
In response to these claims, Amazon contended that its former employees are misinformed about the current state of its AI initiatives, asserting that the Amazon Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia GPUs. The company reiterated its commitment to developing “the world’s best personal assistant” through Alexa.