Amazon’s initiative to generate revenue from its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to internal documents and sources familiar with the situation cited by the Wall Street Journal, Amazon lost over $25 billion on devices such as the Echo and Kindle between 2017 and 2021. Despite having hundreds of millions of customers using these devices, the majority use the Alexa-enabled Echo speakers primarily for basic functions such as setting alarms rather than for shopping on Amazon.
A former senior employee mentioned, “We worried we’ve hired 10,000 people and we’ve built a smart timer,” illustrating concerns about the effectiveness of the investments made in this area.
In response to these challenges, Amazon’s CEO Andy Jassy is seeking solutions and is reportedly working on a subscription model for the voice assistant. However, some engineers involved in developing the paid version of Alexa are skeptical about its potential impact, according to the Wall Street Journal.
An Amazon spokesperson stated, “We are focused on the value we create when customers use our services, not just when they buy our devices,” adding that the Devices & Services organization has successfully established profitable business ventures and is positioned for future success.
In addition, reports indicate that Amazon’s newly developed AI-powered version of Alexa, demonstrated in September, is still in its early stages. Former employees have commented that the company lacks sufficient data and access to the necessary chips to support the large language model (LLM) behind the new assistant. Furthermore, Amazon has reportedly shifted its focus towards enhancing generative AI capabilities for its cloud computing sector, Amazon Web Services.
In response to these criticisms, Amazon has defended its efforts, asserting that the claims made by former employees are inaccurate and uninformed regarding its current Alexa AI initiatives. The company emphasized that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, maintaining its goal of creating the world’s best personal assistant.