Amazon’s strategy to generate profit through its Alexa-enabled devices has reportedly fallen short, leading to significant financial losses for the company. According to reports from the Wall Street Journal, the online retail giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, based on internal documents and sources familiar with the matter.
Despite having hundreds of millions of customers, Amazon’s Echo devices are primarily used for basic functions like setting alarms and utilizing free apps rather than facilitating purchases on the platform. A former senior Amazon employee expressed concerns about the direction of the company’s investments, noting, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
Now, Amazon’s CEO Andy Jassy is seeking solutions and is reportedly introducing a paid version of its voice assistant. However, some engineers working on this new paid-tier Alexa are skeptical about its potential success, 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,” emphasizing that the company’s Devices & Services division has established several profitable ventures and is poised for continued success in the future.
In addition, concerns have emerged regarding Amazon’s new AI-powered Alexa, which was showcased in September. Former employees indicated that the new virtual assistant is far from completion, lacking sufficient data and access to the necessary chips to support the large language model (LLM). Reports also suggest that Amazon has deprioritized the AI-enhanced Alexa in favor of developing generative AI tools for its cloud computing branch, Amazon Web Services.
In response to these criticisms, Amazon refuted the claims made by former employees, asserting that its Artificial General Intelligence team has access to both in-house chips and Nvidia GPUs, and reiterated its commitment to creating “the world’s best personal assistant” with Alexa.