Amazon is said to be planning to cap the price of unprofitable Alexa service and AI improvements at up to $10 per month


Amazon is planning a major overhaul of its decade-old loss-making Alexa service that would include two levels of conversational generative AI, and is considering charging a monthly fee of about $5 for access to the improved version, according to people with direct knowledge of the company’s plans.

Known internally as “Banyan,” a reference to sprawling ficus trees, the project would represent the first major overhaul of the voice assistant since it was introduced with the Echo line of speakers in 2014. Amazon has planned to name the new voice assistant “Remarkable Alexa,” the people said.

The sources include eight current and former employees who worked on Alexa and who spoke on condition of anonymity because they were not authorized to discuss confidential projects.

Amazon has given employees an August deadline to produce the latest version of Alexa, with CEO Andy Jassy taking a personal interest in rejuvenating Alexa, three of the people said. In an April letter to shareholders, Jassy promised a “more intelligent and capable Alexa” without providing additional details.

The people cautioned that the company’s plans for Alexa, including pricing and release dates, could change or be canceled depending on the progress of Project Banyan.

“We’ve already integrated generative AI into various components of Alexa, and are hard at work on large-scale implementation across the more than half a billion Alexa-enabled devices already in homes around the world — to enable even more proactive, personalized, and reliable assistance for our customers,” an Amazon spokeswoman said in a statement.

The service — which provides verbal answers to user queries, such as the local weather, and can serve as a hub for controlling home appliances — was a pet project of Amazon founder Jeff Bezos, who envisioned a technology that could emulate the fictional voice-speaking computers featured in television’s Star Trek series.

Keeping up with rivals in generative AI is crucial for Amazon, as Google, Microsoft and OpenAI have attracted more favorable attention for their so-called chatbots, which can respond to complex prompts or questions with complete sentences almost instantly.

The release of ChatGPT in late 2022 has sparked an investment spree in AI firms and pushed chipmaker Nvidia ahead of Amazon and others by market capitalisation, and for a time became the world’s second most valuable company.

Apple is also advancing its own AI strategy, including updating the Siri voice-activated software embedded in iPhones to include more conversational answers.

Some Amazon employees who worked on the project say Banyan represents a “desperate attempt” to revive the service, which has never turned a profit, and was caught amid the rise of competing generative AI products over the past 18 months. Those people said they have been told by senior management that this year is a crucial year for the service to finally demonstrate that it can generate meaningful sales for Amazon.

Used primarily through Amazon TV and Echo speaker devices, Alexa is mostly popular for setting timers, quickly getting the weather, playing songs or answering simple questions. Amazon’s hopes of boosting sales in its e-commerce operation through this service have been dashed, mostly because users prefer to first see the products they are buying for easy comparison.

The Seattle retailer will cut thousands of jobs at the unit through the end of 2023, part of a broader restructuring following the pandemic-driven e-commerce boom.

‘must win’

With the embedded AI, Amazon hopes Alexa customers will ask it for shopping advice, such as which gloves and hat to buy for a hiking trip, similar to a text-based service called Rufus on Amazon’s website that it launched earlier this year, the people said.

Some said they had been told by senior management that 2024 was a “winnable” year for Alexa, the brand most closely associated with Amazon, along with Prime membership and Kindle and Fire devices.

But the AI-powered version of the service demonstrated in September has yet to be released to the wider public, while competitors have released a number of updates to their chatbots. In the demonstration, Alexa lost her robotic tone and answered questions such as the start time of a football game. “You can now have human-like conversations with Alexa,” promised Dave Limp, Amazon’s hardware chief at the time, who has since left the company.

Amazon is working to replace the current free version, referred to internally as “classic Alexa,” with an AI-powered version and another tier that uses more powerful AI software for more complex queries and prompts, which people would have to pay at least $5 a month to access, some of the people said. Amazon has also considered a roughly $10-a-month price, they said.

No tie-in with Amazon’s $139-a-year Prime membership is being considered, the sources said.

As envisioned, the paid version could perform more complex tasks such as writing a short email, sending it and ordering dinner for delivery from Uber Eats, all from a single prompt, some of the people said. It could also eliminate the need to repeatedly say “Alexa” when interacting with the software and offer more personalization, they said.

But people said they couldn’t understand why customers would be willing to pay for such a service, even if it was better than what’s available for free today.

Amazon has also faced false starts in its AI development and other challenges such as confusion — when software gives incorrect or misleading information — and poor employee morale in the department.

Some of Amazon’s plans for the service have already been reported by Business Insider, including struggles with the performance of the built-in AI and expectations for a paid service, though Reuters was first to report on tiered pricing, internal timelines, and potential monthly fees.

Amazon is also aiming to boost home automation through Alexa, the people said. Alexa can now connect wirelessly to so-called smart devices so they can be controlled by voice, allowing, for example, a user to turn on a porch light every day at 8 p.m.

But noteworthy is that Alexa can learn from users so it can turn on the television for a favorite weekly program or turn on the user’s coffee pot after a morning alarm goes off, which is possible today through gestures that Amazon calls Routines.

Some said such a service would require customers to purchase additional Alexa-enabled devices to work properly.

The company had been working since last year on devices to extend the service to more rooms of the home, such as an Alexa-enabled home energy consumption tracker and a carbon monoxide detector, people familiar with the matter told Reuters.

© Thomson Reuters 2024

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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