Amazon is planning to revamp Alexa's AI capabilities and introduce a monthly subscription fee.

• This year, Amazon is set to reveal an upgraded version of its 10-year-old voice assistant, which will come with a monthly subscription fee, according to reports.
• According to a source, the offering will not be included in Amazon Prime subscriptions.
• While Alexa is commonly used for kitchen timers and weather updates, OpenAI recently unveiled a chatbot capable of two-way conversations.

Amazon is reportedly upgrading its Alexa voice assistant with generative artificial intelligence and intends to charge a monthly subscription fee to cover the cost of the technology, according to sources.

Amazon is planning to release a more conversational version of Alexa later this year, which could help it better compete with new generative AI-powered chatbots from companies such as Google and OpenAI, according to two sources who requested anonymity due to the confidential nature of the discussions. While Amazon's Prime subscription does not include Alexa, the company has not yet determined the price for the new conversational version.

Amazon declined to comment on its plans for Alexa.

In 2014, Amazon's Alexa impressed consumers with its voice-driven tasks, but its capabilities may seem outdated compared to recent advancements in artificial intelligence. Recently, OpenAI unveiled GPT-4o, which allows for two-way conversations that can delve deeper than Alexa. For instance, it can translate conversations into different languages in real time. Google also launched a similar generative-AI-powered voice feature for Gemini.

The updates made last week were perceived by some as a threat to Alexa and Siri, Apple's voice assistant feature for iPhones. NYU professor Scott Galloway referred to the updates as the "Alexa and Siri killers" in his recent podcast. People commonly use Alexa and Siri for basic tasks, such as setting timers or alarms and announcing the weather.

Since Jeff Bezos' departure, the profit imperatives have put pressure on the division that was once highly regarded within Amazon. Recent developments have led to the creation of new AI chatbots, which has intensified this pressure.

The early obsession of Bezos with Alexa was described as a passion project by three former employees. The attention from Bezos led to more dollars and less pressure to make a return on those dollars immediately.

According to three sources, when Andy Jassy became CEO in 2021, Amazon's business was right-sized during the pandemic, and Alexa became less of a priority internally. One source said that Jassy was privately underwhelmed with what modern-day Alexa is capable of. The Alexa team worried that they had created an expensive alarm clock, weather machine, and way to play Spotify music, another source added.

According to a person in the room, Jassy, an avid sports fan, asked the voice-assistant the live score of a recent game and was openly frustrated that Alexa didn't know an answer that was so easy to find online.

Amazon responded to inquiries by referring to its annual shareholder letter released recently. In the letter, Jassy stated that the company was developing a significant number of GenAI applications across all its consumer businesses, including a more intelligent and capable Alexa.

The team is now responsible for making Alexa a competitive AI device that justifies the resources and personnel Amazon has invested in it. After a significant restructuring, many team members have moved to the AGI team, as stated by three sources. However, some argue that there is excessive bloat within the Alexa team, which consists of thousands of employees.

Since 2023, Amazon has reportedly sold over 500 million Alexa-enabled devices, securing its position among consumers.

Alexa, were you too early?

The New York Times reports that Apple is predicted to reveal a more conversational Siri at its annual developers conference in June, as the current wave of advanced generative AI allows for more creative and human-sounding interactions.

The Alexa team's idea was great, but it may have been too early, and it will be challenging to change course now.

The challenge of finding AI engineering talent is shared among OpenAI, Microsoft, and Google, as they all recruit from the same pool of academics and tech talent. Additionally, generative AI workloads are expensive due to the hardware and computing power required. A source estimated that the cost of using generative AI in Alexa is 2 cents per query, and a $20 price point was floated internally. Another suggested that it would need to be in a single digit dollar amount to undercut other subscription offerings. OpenAI's ChatGPT charges $20 per month for its advanced models.

The installed user base of Alexa, with devices in hundreds of millions of homes, presents an opportunity for those who worked on it. However, the fact that Alexa is already in people's living rooms and kitchens makes the stakes higher, and mistakes more costly if it doesn't understand a command or provide unreliable information.

Despite offering various AI models on AWS, Amazon is not considered a leader in large language models, with OpenAI, Google, and Meta currently holding that position. In response, Amazon has invested $2.75 billion in AI startup Anthropic, its largest venture investment to date. Google also has an Anthropic investment and partnership.

According to a source, Amazon is set to incorporate its own language model, Titan, into the Alexa upgrade.

According to two sources, Bezos has expressed concern that Amazon is lagging behind in AI development. Despite his continued involvement in Amazon's AI initiatives, he has been sending emails to Amazon executives questioning why certain AI startups are choosing other cloud providers over AWS.