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Amazon’s plan to make money through its Alexa-enabled devices has reportedly not paid off — and is actually losing the company billions of dollars.
The online retail giant lost over $25 billion from its Echo, Kindle, and other devices from 2017 to 2021, the Wall Street Journal reported, citing internal documents and unnamed people familiar with the matter. While Amazon counts hundreds of millions of customers for its devices, its Alexa-enabled Echo speakers are reportedly used more for setting alarms and other free apps, and less 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.
Now, Amazon chief executive Andy Jassy is looking for a fix, and the company is reportedly launching a paid tier of its voice assistant. However, people told the Wall Street Journal some of Amazon’s engineers working on the paid-version of Alexa are worried it won’t make a difference.
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 it demoed in September, is reportedly not even close to being ready, according to former employees. The company doesn’t have enough data nor access to the chips needed to run the large language model (LLM) powering the new version of its virtual assistant, Fortune reported. Amazon has also reportedly deprioritized the AI-powered Alexa to focus on building generative AI for its cloud computing unit, Amazon Web Services.
Amazon said its former employees are incorrect and uninformed on its current Alexa AI efforts, and that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs). The company’s plan for Alexa “remains the same — to build the world’s best personal assistant.”