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Amazon may charge for Alexa: Report suggests major overhaul of AI assistant

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6 months ago

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Amazon may charge for Alexa: Report suggests major overhaul of AI assistant

Amazon is considering charging customers up to US$10 a month for a revamped, AI-enabled version of its currently free voice assistant Alexa, Reuters reported Friday, suggesting a major overhaul for the money-losing service is on the horizon as the retail giant fights to remain competitive in the generative AI race.

Amazon is reportedly planning a major overhaul to Alexa.

The Washington Post via Getty Images

Key Takeaways
  • Amazon is working to replace its current and free version of Alexa, internally known as “Classic Alexa,” with an AI-powered version that includes a conversational generative AI, Reuters reported, citing eight unnamed current and former employees who worked on the company’s voice assistant.
  • The revamped voice assistant, dubbed “Remarkable Alexa,” will be available in two different tiers, Reuters said, both of which will be powered by AI but only one of which will be free.
  • Amazon is considering charging at least $5 a month for access to the higher tier Alexa and potentially as much as $10 a month, sources told Reuters, with the paid-for version using more powerful software in order to complete more complicated tasks and queries.
  • Sources told Reuters there are no plans to combine the service with or include it as part of Amazon’s $139 a year Prime membership, which boasts an array of benefits including free shipping, media like Prime Video and Amazon Music and exclusive deals.
  • The effort to overhaul the voice assistant is known internally as Project Banyan, Reuters said, a reference to the iconic trees that are famous for their large size, sprawling canopy and complex root systems.
  • Amazon is targeting an August deadline for workers to complete the overhauled Alexa, Reuters said, noting sources warned the launch date, as well as other specifics associated with Project Banyan, like price, could change depending on progress.
What Is “revamped Alexa” And Why Would People Pay For It?

While company leaders have announced plans to update and refresh Alexa, few details have been made public about what this actually means. It is expected that Alexa’s conversational abilities will be more sophisticated and customers will be able to use the embedded AI to help with shopping and other tasks like writing emails and ordering food, as well as to streamline the use of smart devices — those connected to the internet — around the home.

Given that Alexa has been freely available for nearly a decade now, it is unclear why Amazon customers will now shell out for Alexa services or how Amazon plans to go about persuading them to upgrade from a free tier to a paid one.

Key Background

Reuters’ report is the first to outline a potentially stratified service, associated monthly fee and target launch date for “Remarkable Alexa.” It fleshes out earlier details speculating on the new product reported by the likes of Business Insider which, if true, would mark the largest overhaul to the service since it was introduced in 2014. The service has yet to make Amazon money and the rapid uptake of generative AI tools like ChatGPT have led to questions about its future.

Efforts to reimagine Alexa have reportedly been plagued by technical issues, internal politics and poor morale, the latter of which has not been helped by cuts to the retail giant’s hardware division, mass layoffs and the departure of key leaders.

While Alexa and its ability to respond to spoken commands felt groundbreaking 10 years ago, advances in generative AI have left the service feeling dated amid impressive AI assistants launched by Amazon’s tech rivals like Google, OpenAI and Microsoft, which can respond swiftly and handle complicated queries. Amazon management reportedly view 2024 as a “must win” year for Alexa and the company’s AI efforts against rivals deploying increasingly sophisticated AI tools.

Forbes Valuation

Amazon founder Jeff Bezos is the second richest person in the world with a net worth of $203.5 billion. Bezos owns The Washington Post and space venture Blue Origin and has said he plans to give away most of his fortune during his lifetime.

This article was originally published on forbes.com and all figures are in USD.

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