Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly fallen short, resulting in significant financial losses for the company. According to internal documents cited by the Wall Street Journal, Amazon lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021. Despite having hundreds of millions of customers for these products, the Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms and utilizing free applications, rather than for shopping.
A former senior Amazon employee reflected on the situation, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response, CEO Andy Jassy is exploring solutions, including plans to introduce a paid version of the Alexa voice assistant. However, some engineers working on this project expressed concerns that it may not have the desired impact.
An Amazon spokesperson emphasized the company’s commitment to the value created for customers through its services, not just device sales. They claimed that the Devices & Services division has already established several profitable ventures and is well-positioned for future success.
Additionally, reports indicate that Amazon’s new AI-powered version of Alexa, showcased in September, is not yet ready for launch. Former employees suggest that the company lacks sufficient data and access to the necessary chips to operate the advanced language model for this new assistant. Furthermore, Amazon has reportedly shifted its focus towards developing generative AI for its cloud services, Amazon Web Services, rather than prioritizing the upgraded Alexa.
In response to these claims, Amazon defended its current AI initiatives, asserting that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company reiterated that its goal remains to build the best personal assistant in the world.