Amazon’s strategy to generate revenue through its Alexa-enabled devices has not succeeded as anticipated, with reports indicating that it has cost the company billions.
From 2017 to 2021, Amazon lost over $25 billion from its Echo, Kindle, and other devices, according to internal documents and sources cited by the Wall Street Journal. Although the company has amassed hundreds of millions of customers for its devices, the usage of its Alexa-enabled Echo speakers leans more towards basic functions such as setting alarms and using free apps rather than facilitating shopping on Amazon.
A former senior employee expressed concerns about the company’s hiring practices and the effectiveness of their product development, 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 seeking solutions, including the launch of a paid version of its voice assistant. However, some engineers involved in this project have expressed doubts about its potential effectiveness.
An Amazon spokesperson emphasized the company’s focus on delivering value through its services, asserting that the Devices & Services division has successfully established multiple profitable ventures and is equipped to continue doing so.
On another front, Amazon’s latest AI version of Alexa, which was showcased in September, is reportedly far from ready. Former employees have pointed out that the company lacks adequate data and access to necessary chips to support the advanced large language model for the new assistant. Additionally, Amazon has shifted its focus toward developing generative AI for its cloud service, Amazon Web Services, potentially sidelining the AI update for Alexa.
In response to these claims, Amazon contends that its former employees are misinformed about its AI developments, stating that its Artificial General Intelligence team has access to both proprietary Trainium chips and Nvidia GPUs. The company reiterated its commitment to creating the best personal assistant in the world.