Amazon’s effort to generate revenue through its Alexa-enabled devices has reportedly not been successful, resulting in significant financial losses for the company.
The online retail giant incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, according to the Wall Street Journal, citing internal documents and unnamed sources. Despite having hundreds of millions of customers for its devices, Alexa-enabled Echo speakers are mostly used for setting alarms and other free applications 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 a solution and the company is reportedly introducing a paid tier for its voice assistant. Nevertheless, some engineers working on the paid version of Alexa are skeptical it will make a difference, the Wall Street Journal reported.
“Amazon is focused on the value we create when customers use our services, not just when they buy our devices,” an Amazon spokesperson said in a statement shared with Quartz. “Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so going forward.”
Meanwhile, Amazon’s new artificial intelligence-powered Alexa, which was demonstrated in September, is reportedly far from ready, according to former employees. The company lacks sufficient data and access to the necessary chips to operate the large language model powering the new version of its virtual assistant, Fortune reported. Additionally, Amazon has reportedly deprioritized the AI-powered Alexa to focus on developing generative AI for its cloud computing unit, Amazon Web Services.
Amazon refuted claims by former employees, stating they are uninformed about its current Alexa AI efforts. The company emphasized that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs). Amazon reiterated that its goal for Alexa remains unchanged: to build the world’s best personal assistant.