Amazon’s strategy 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, the online retail behemoth lost over $25 billion on its Echo, Kindle, and other devices between 2017 and 2021.
Despite having hundreds of millions of customers for its devices, the Echo speakers equipped with Alexa are primarily used for basic functions like setting alarms, rather than for shopping on Amazon. A former senior Amazon employee expressed concerns about the company’s investments, stating, “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 version of its voice assistant. However, some engineers involved in developing this paid version have expressed doubts about its potential impact.
An Amazon spokesperson defended the company’s approach, stating, “We focus on the value we create when customers use our services, not just when they buy our devices.” They emphasized that the Devices & Services organization has established several profitable ventures for Amazon and is well-equipped for future success.
Meanwhile, the anticipated AI-powered update for Alexa, showcased in September, is not yet finished, according to former employees. They have raised concerns about the lack of sufficient data and access to the necessary chips to effectively run the advanced large language model (LLM) for this new version. Additionally, Amazon has reportedly shifted its focus away from AI enhancements in Alexa to prioritize generative AI development within its cloud computing division, Amazon Web Services.
Amazon refuted claims from former employees about its AI capabilities, asserting that the Amazon Artificial General Intelligence team has access to both its in-house Trainium chips and Nvidia graphics processing units (GPUs). The company reaffirmed its commitment to its goal of creating “the world’s best personal assistant.”