Amazon, $AMZN, plans to charge Alexa users a monthly fee when it rolls out an AI-infused version of the voice assistant later this year.
The Seattle-based tech and retail giant will launch a more conversational version of Alexa later this year, potentially positioning it to better compete with new generative AI-powered chatbots from companies like Google and OpenAI. This information comes from two sources familiar with the matter, who requested anonymity because the discussions were private. According to one source, Amazon’s subscription for Alexa will not be included in the $139-per-year Prime offering, and the price point has not yet been finalized.
Amazon declined to comment on its plans for Alexa.
While Amazon impressed consumers with Alexa’s voice-driven tasks in 2014, its capabilities might seem outdated amid recent advances in artificial intelligence. Last week, OpenAI announced GPT-4, which enables two-way conversations that can go much deeper than Alexa. For instance, it can translate conversations into different languages in real time. Google launched a similar generative-AI-powered voice feature for Gemini.
Business Insider first reported on Amazon’s plans to revamp Alexa and introduce a new paid subscription plan in 2024. David Limp, Amazon’s former SVP of devices and services, told The Verge in September that the company was considering charging for a more powerful version of Alexa.
Some interpreted last week’s announcements as a threat to Alexa and Siri, Apple’s voice assistant for iPhones. NYU professor Scott Galloway referred to the updates as the “Alexa and Siri killers” on his recent podcast. Many people use Alexa and Siri for basic tasks, such as setting timers, alarms, and announcing the weather.
The development of new AI chatbots in recent months has increased the pressure internally on a division that was once seen as a favorite of Amazon founder Jeff Bezos, according to the sources, but has faced strict profit imperatives since his departure.
Three former employees pointed to Bezos’ early obsession with Alexa, describing it as his passion project. Attention from Bezos resulted in more funding and less pressure to generate immediate returns.
That changed when Andy Jassy became CEO in 2021, according to three sources. Jassy was tasked with rightsizing Amazon’s business during the pandemic, and Alexa became less of a priority internally. Jassy has been privately underwhelmed with modern-day Alexa’s capabilities, according to one person. The Alexa team worried they had created an expensive alarm clock, weather machine, and music player, one source said.
For example, Jassy, an avid sports fan, asked the voice assistant for the live score of a recent game, according to a person in the room, and was openly frustrated that Alexa didn’t know an answer that was easy to find online.
When reached for comment, Amazon pointed to the company’s annual shareholder letter released last month. In it, Jassy mentioned that the company was building a “substantial number of GenAI applications across every Amazon consumer business,” adding that this included “an even more intelligent and capable Alexa.”
The team is now tasked with turning Alexa into a relevant device that holds up amid new AI competition and justifies the resources and headcount Amazon has dedicated to it. The division has undergone a massive reorganization, with much of the team shifting to the artificial general intelligence (AGI) team, according to the three sources. Others pointed to bloat within the Alexa team, which consists of thousands of employees.
As of 2023, Amazon said it had sold more than 500 million Alexa-enabled devices, giving the company a significant presence with consumers.
