Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short, resulting in substantial financial losses for the company. An analysis by the Wall Street Journal reveals that Amazon lost over $25 billion on products like Echo and Kindle between 2017 and 2021, citing internal documents and unnamed sources.
Despite boasting hundreds of millions of customers for its devices, the usage of Alexa-enabled Echo speakers has largely centered around basic functions like setting alarms rather than facilitating purchases on Amazon. A former senior employee expressed concerns about the company’s direction, reflecting on the hiring of thousands of staff primarily to develop a smart timer instead of more profitable applications.
To address these challenges, Amazon CEO Andy Jassy is reportedly exploring a paid version of its voice assistant. However, some engineers involved in this project doubt its potential for success. An Amazon spokesperson emphasized the focus on creating value through customer use of services beyond just device sales, asserting that their Devices & Services division has successfully established numerous profitable ventures.
On another front, Amazon’s new AI-enhanced Alexa, showcased in September, appears to be far from completion according to former employees. There are concerns regarding insufficient data and the availability of necessary chips for the large language model driving the new version. Furthermore, reports indicate that the company is prioritizing generative AI development for its cloud computing unit, Amazon Web Services, over advancements in AI for Alexa.
In response to these criticisms, Amazon stated that the claims from former employees about its AI initiatives are inaccurate. The company maintains that its Artificial General Intelligence team has access to both proprietary and Nvidia chips, and it remains committed to developing the best personal assistant.