Amazon unveils long-awaited Alexa revamped with AI features

Amazon on Wednesday announced a long-awaited overhaul of its Alexa digital assistant.

The revamped service, which Amazon is calling “Alexa+,” is powered by generative artificial intelligence, Panos Panay, the company’s senior vice president of devices and services, said on stage at an event in New York.

“Every once in a while, a technology comes around and it changes everything,” Panay said. “[Large language models] enter the stage and fundamentally change the way we think about AI…It’s shaken up everything.”

Alexa+ can purchase concert tickets, order groceries, book dinner reservations and give recipe suggestions tailored to specific people in a user’s household, among other tasks. It can also read study guides, then quiz users on the answers, as well as organize handwritten documents and recall information from them.

“She’ll learn the rhythm of your life and proactively take action with you,” Panay said.

Daniel Rausch, Amazon’s vice president of Alexa and Fire TV, said on stage that Alexa has undergone a “complete re-architecture” as part of the upgrade.

“It is not as easy as taking an LLM and jacking it into the original Alexa,” Rausch said.

Alexa+ uses a “broad range of state-of-the-art” training models from several providers. That includes Amazon’s own set of Nova models, as well as those created by third parties like Amazon-backed AI startup Anthropic.

The company has faced growing pressure to upgrade Alexa since OpenAI released ChatGPT in late 2022, wowing users with its ability to perform complex functions like writing fiction and coding software. Suddenly Alexa and other voice assistants like it began to appear outdated, prompting Amazon to consider a revamp.

“They recognize they need to get this right and if they do get it right, then maybe we’re talking less about OpenAI vs. Anthropic and more of Alexa vs. ChatGPT,” said Tom Forte, senior consumer internet analyst at Maxim Group.

CNBC reported last May that Amazon was considering charging a monthly subscription fee for Alexa as part of a push to make money from the service.

An Alexa subscription fee could help Amazon offset the high cost of AI development, and make the digital assistant a more profitable business, said Jitesh Ubrani, a research manager overseeing wearables and other devices at IDC.

“You look at any generative AI system out there, and they all have very high development costs,” Ubrani said.

Amazon will need to tread carefully with a paid Alexa service to avoid alienating Prime subscribers, who already pay $139 a year for the loyalty membership, Ubrani said.

The company will also have to show users “what this new Alexa can do” to justify a subscription, he added. OpenAI offers a free version of ChatGPT, as well as a premium subscription for $20 a month. A paid version of Anthropic’s Claude chatbot costs $20 a month.

“Their audience is already very large, so even transitioning a small portion of those users to a subscription could bring them a fair amount of money,” Ubrani said.

Launched in 2014, Alexa was a passion project of Amazon founder Jeff Bezos, who envisioned it could one day resemble an all-knowing computer like the one from “Star Trek.” Amazon established an early lead in voice software, and more than 500 million Alexa devices have been sold globally, the company said in 2023.

But Alexa hasn’t been as transformative as Bezos hoped. Most consumers use their digital assistants for “very simple tasks,” like checking the weather or playing music, and primarily via smartphones, not smart speakers, according to Forrester Research.

Alexa also remains unprofitable. Amazon has never charged for access to Alexa, instead infusing it into its lineup of smart speakers, tablets and other devices, which are notoriously priced at or below the cost to make them. The company hoped Alexa interactions would steer consumers toward spending money on its other products and services, but that failed to materialize.

Amazon has lost tens of billions of dollars on its devices business, which includes Echo, Kindle, Fire TV and other products, The Wall Street Journal reported last July.

Following the launch of ChatGPT, Amazon began working to overhaul Alexa with generative AI technology to make it more conversational and useful. The company demoed a souped-up Alexa in 2023, though that new version of Alexa, called “let’s chat,” didn’t launch to the public.

Amazon CEO Andy Jassy has closely scrutinized, or in some cases discontinued, several of the company’s more unproven or money-losing projects. That included the devices and services unit, which houses Alexa. The unit underwent two rounds of layoffs as part of companywide job cuts in 2022 and 2023, in which more than 27,000 Amazon employees were let go.

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