Amazon’s initiative to generate profits from its Alexa-enabled devices has reportedly backfired, resulting in significant financial losses for the company. According to internal documents and sources familiar with the situation, the online retail giant suffered over $25 billion in losses related to its Echo, Kindle, and other devices from 2017 to 2021.
Despite boasting hundreds of millions of customers for its devices, the use of Alexa-enabled Echo speakers is primarily focused on setting alarms and other free applications rather than facilitating purchases on Amazon. A former senior employee expressed concerns about the efficacy of these devices, noting, “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 seeking solutions, including the introduction of a paid version of its voice assistant. However, some engineers involved in the development of this paid version are skeptical about its potential success.
An Amazon spokesperson stated, “We are focused 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-positioned for future success.
In addition, Amazon’s newly developed AI-enhanced version of Alexa, which was showcased in September, is reportedly not yet ready for deployment. Former employees indicate that the company lacks the necessary data and access to chips required for the advanced language model that powers this version of the virtual assistant. Furthermore, it has been suggested that Amazon has shifted its priorities to focus on generative AI for its cloud computing division, Amazon Web Services.
Amazon, however, refutes these claims from former employees, asserting that they are misinformed about its current AI initiatives. The company stated that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs and reaffirmed its commitment to building “the world’s best personal assistant” through Alexa.