Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly fallen short and is costing the company billions.
According to internal documents and sources familiar with the situation, the online retail giant lost over $25 billion between 2017 and 2021 due to its Echo, Kindle, and other devices. Although Amazon boasts hundreds of millions of customers for these devices, the Echo speakers are primarily used for basic functions like setting alarms rather than facilitating purchases on Amazon.
A former senior Amazon employee expressed concerns to the Wall Street Journal, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the financial struggles, Amazon CEO Andy Jassy is seeking solutions, including the potential launch of a paid version of its voice assistant. However, some engineers working on this project have expressed doubts about its effectiveness.
An Amazon spokesperson emphasized the company’s focus on the value created through customer interactions with its services, rather than just device sales. They noted that the Devices & Services division has successfully established several profitable ventures and is positioned for future success.
Additionally, reports indicate that Amazon’s new AI-powered Alexa, which was showcased in September, is not yet ready, due to a lack of sufficient data and access to the necessary technology for running the large language model. The company has also shifted its focus toward developing generative AI for its Amazon Web Services unit, deprioritizing the AI component of Alexa.
In response to the criticism from former employees, Amazon stated that they were misinformed regarding its current AI efforts and that the Amazon Artificial General Intelligence team has access to both in-house chips and Nvidia GPUs. The firm remains committed to its goal of creating the world’s best personal assistant.