Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly been unsuccessful, leading to significant financial losses for the company. According to internal documents and sources familiar with the matter, the online retail giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021.
Despite boasting hundreds of millions of customers for its devices, Amazon’s Echo speakers are primarily used for functions like setting alarms and utilizing free applications, rather than facilitating shopping on the platform. A former senior employee expressed concern over the company’s hiring and investment strategies, remarking on a perceived lack of impactful innovation.
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid version of the Alexa voice assistant. However, engineers working on this paid version have expressed skepticism about its potential efficacy.
An Amazon spokesperson emphasized that the company prioritizes the value of its services to customers rather than simply device sales, asserting that the Devices & Services division has successfully established multiple profitable businesses and is poised for further growth.
Meanwhile, Amazon’s new AI-powered Alexa, showcased in September, faces readiness challenges. Former employees have indicated that the company lacks sufficient data and access to the necessary chips to support the advanced language model behind the new assistant. Additionally, Amazon has reportedly shifted its focus towards developing generative AI for its cloud computing service, Amazon Web Services, rather than prioritizing the AI-powered Alexa.
In response to these claims, Amazon stated that the assertions made by former employees are incorrect, affirming that its Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs, and reiterating its goal of creating the world’s best personal assistant.