Amazon’s ambitions to generate revenue through its Alexa-enabled devices have reportedly fallen short, resulting in significant financial losses for the company. A report from the Wall Street Journal indicated that Amazon lost over $25 billion between 2017 and 2021 on its Echo, Kindle, and other devices, according to internal documents and sources familiar with the situation. While Amazon boasts hundreds of millions of customers for its devices, the use of its Alexa-enabled Echo speakers tends to focus more on setting alarms and utilizing free applications, rather than facilitating purchases on Amazon.
A former senior employee expressed concern, 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 new strategies, including the introduction of a paid version of its voice assistant. However, according to the Wall Street Journal, some engineers involved in this endeavor have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value created from customer interactions, rather than solely device sales. “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so moving forward,” the spokesperson noted.
In addition, the rollout of an upgraded AI-powered Alexa, which was showcased in September, faces setbacks. Former employees have suggested that the new version is not yet ready due to insufficient data and a lack of access to necessary chips to operate the large language model. Furthermore, Amazon is prioritizing generative AI development for its cloud computing division, Amazon Web Services, over advancing the new version of Alexa.
In response to this criticism, Amazon stated that former employees are misinformed about its current AI initiatives and confirmed that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. The company’s intention with Alexa remains clear: to build the world’s best personal assistant.