Amazon’s strategy to profit from its Alexa-enabled devices has reportedly failed, resulting in significant financial losses for the company.
The online retail giant has lost over $25 billion from its Echo, Kindle, and other devices between 2017 and 2021, according to the Wall Street Journal, which cites internal documents and unnamed sources. Although Amazon has millions of customers for its devices, Alexa-enabled Echo speakers are mostly used for free tasks like setting alarms rather than for shopping on Amazon.
“We worried we’ve hired 10,000 people and we’ve built a smart timer,” a former senior Amazon employee told the Wall Street Journal.
In response, Amazon CEO Andy Jassy is seeking solutions and the company is reportedly introducing a paid tier for its voice assistant. However, some engineers working on the paid version of Alexa doubt its effectiveness, according to sources cited by the Wall Street Journal.
An Amazon spokesperson stated that the company focuses on the value generated when customers use their services, not just when they buy devices. “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward,” the spokesperson added.
Simultaneously, Amazon’s new AI-powered Alexa, demonstrated in September, is reportedly nowhere near ready. Former employees claim the company lacks sufficient data and the necessary chips to run the large language model (LLM) powering the new virtual assistant, as reported by Fortune. Furthermore, Amazon has reportedly shifted priorities from AI-powered Alexa to developing generative AI for its cloud computing division, Amazon Web Services.
Amazon refuted these claims, stating that its former employees are uninformed about the current AI efforts. The company maintained that its Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia GPUs. Amazon reiterated its commitment to building the world’s best personal assistant.