Amazon’s efforts to generate revenue from its Alexa-enabled devices have reportedly fallen short, resulting in significant losses for the company. According to the Wall Street Journal, Amazon incurred over $25 billion in losses from its Echo, Kindle, and other devices between 2017 and 2021, as revealed in internal documents and insights from sources familiar with the situation. Despite having hundreds of millions of customers for these devices, the primary uses for Alexa-enabled Echo speakers appear to be setting alarms and accessing free applications, rather than shopping on Amazon.
A former senior employee expressed concerns to the Wall Street Journal, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to these challenges, Amazon CEO Andy Jassy is reportedly seeking solutions, including the introduction of a paid tier for Alexa. However, some of the engineers working on this version have expressed skepticism about its potential success.
An Amazon spokesperson emphasized that the company’s focus is on creating value through service usage, not solely device sales. They also noted that the Devices & Services division has established numerous profitable ventures for Amazon.
Meanwhile, the launch of Amazon’s new AI-powered Alexa, which was showcased in September, is said to be far from ready. Former employees have indicated that the company lacks sufficient data and access to the required chips for the large language model that will fuel the updated assistant. Reports suggest that Amazon has shifted its priorities to enhance generative AI for its cloud computing branch, Amazon Web Services.
In response to the criticisms from former employees, Amazon maintains that their claims are incorrect and that the Amazon Artificial General Intelligence team has access to the necessary Trainium chips and Nvidia GPUs. The company insists that its goal remains to develop the premier personal assistant in the world.