Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in substantial losses for the company. According to the Wall Street Journal, internal documents and sources indicate that Amazon lost over $25 billion on its Echo, Kindle, and other devices from 2017 to 2021. Despite having hundreds of millions of customers, the usage of Alexa-enabled Echo speakers is primarily for setting alarms and utilizing free applications, rather than making purchases on Amazon.
A former senior Amazon executive expressed concern over the company’s significant investment, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the financial setbacks, Amazon’s CEO Andy Jassy is reportedly seeking solutions, including the launch of a paid tier for the voice assistant. However, some engineers involved in developing this version of Alexa are skeptical about its potential impact.
An Amazon spokesperson emphasized the company’s commitment to creating value through its services, affirming that the Devices & Services organization has established several profitable ventures and is poised to continue this trend.
In addition, reports suggest that Amazon’s new AI-powered Alexa, showcased in September, is still in development and not yet ready. Former employees indicated that the company lacks sufficient data and access to necessary chips for the large language model driving the upgraded virtual assistant. As a result, Amazon has shifted focus to generative AI for its cloud computing division, Amazon Web Services.
Amazon has countered these claims, arguing that the former employees are misinformed regarding its Alexa AI initiatives, maintaining that the Amazon Artificial General Intelligence team has access to the requisite in-house Trainium chips and Nvidia graphics processing units. The company’s goal remains to create the best personal assistant available.