Amazon’s strategy to generate revenue through its Alexa-enabled devices has reportedly been a financial burden, resulting in significant losses for the company. According to internal documents and sources familiar with the situation, the tech giant lost over $25 billion on devices such as Echo and Kindle between 2017 and 2021. Despite having hundreds of millions of customers, data suggests that the Alexa-enabled Echo speakers are primarily used for basic tasks like setting alarms, rather than for shopping purposes.
A former senior Amazon employee expressed concerns about the company’s investment, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon’s CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of the voice assistant. However, engineers involved in the development of this paid tier have raised doubts about its potential effectiveness.
An Amazon spokesperson emphasized that the company prioritizes the value created for customers through its services rather than solely focusing on device sales. They stated that the Devices & Services division has generated several profitable ventures and is well-equipped for future success.
Meanwhile, reports suggest that Amazon’s new AI-powered Alexa, showcased in September, is not yet fully prepared for release. Former employees indicated that the company lacks sufficient data and access to the necessary chips for operating the advanced language model integrated into the updated virtual assistant. Furthermore, Amazon has reportedly shifted its focus toward developing generative AI for its cloud computing segment, Amazon Web Services.
In rebuttal, Amazon contended that assertions from former employees about its AI efforts are inaccurate, claiming that the Amazon Artificial General Intelligence team has the required resources, including in-house chips and Nvidia GPUs. The company reaffirmed its commitment to creating “the world’s best personal assistant” with Alexa.