Amazon’s strategy to generate revenue from its Alexa-enabled devices has reportedly not yielded the expected results, leading to significant financial losses for the company. According to a report by the Wall Street Journal, internal documents and sources familiar with the matter indicate that Amazon lost over $25 billion on its Echo, Kindle, and other devices from 2017 to 2021.
Despite having hundreds of millions of customers using its devices, it appears that the Echo speakers are primarily utilized for basic functions like setting alarms and using free applications, rather than shopping on Amazon. A former senior employee expressed concerns, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the losses, Amazon’s CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for its voice assistant. However, engineers working on this upgraded version of Alexa have voiced doubts about its potential effectiveness, according to reports.
An Amazon spokesperson responded, noting, “We’re focused on the value we create when customers use our services, not just when they buy our devices.” They added that the Devices & Services division has established numerous profitable ventures for Amazon and is well-positioned for continued success.
Additionally, Amazon’s new AI-enhanced version of Alexa, showcased in September, is reportedly far from completion. Former employees indicated the company lacks sufficient data and necessary chips to support the large language model driving the new assistant. Furthermore, Amazon has allegedly shifted its focus to developing generative AI for its cloud services division, Amazon Web Services.
In response to these concerns, Amazon disputed the claims of its former employees, asserting that they are misinformed about the company’s current AI initiatives. The Amazon Artificial General Intelligence team is said to have access to in-house Trainium chips and Nvidia GPUs. The company reiterated its intention to build “the world’s best personal assistant.”