Amazon’s strategy to generate revenue through its Alexa-enabled devices has not been successful, reportedly costing the company billions of dollars. According to internal documents and sources familiar with the matter, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other devices between 2017 and 2021.
Despite millions of customers using these devices, the usage of Alexa-enabled Echo speakers primarily revolves around setting alarms and using free applications rather than facilitating shopping on Amazon. A former senior employee expressed concerns about the investment in personnel versus the actual utility of the devices, highlighting the disconnect between expectations and reality.
In response to these challenges, CEO Andy Jassy is seeking solutions, including the introduction of a paid version of Alexa. However, some engineers are skeptical about this approach’s effectiveness.
An Amazon spokesperson emphasized the company’s focus on creating value for customers through its services rather than solely through device sales, noting that their Devices & Services division has successfully established profitable ventures and is poised for future success.
Meanwhile, reports indicate that Amazon’s new AI-powered version of Alexa, demonstrated in September, is still far from readiness. Former employees have mentioned that the company lacks adequate data and necessary hardware to support the large language model driving the new version. Additionally, Amazon appears to have shifted focus toward developing generative AI for its cloud computing branch, Amazon Web Services.
In response to these claims, Amazon refuted the assertions from former employees, stating they are misinformed regarding the company’s current AI initiatives. A representative stressed that Amazon’s Artificial General Intelligence team has access to both its proprietary chips and Nvidia GPUs, reaffirming the commitment to develop the best personal assistant in the market.