Amazon plans to overhaul its decade-old, money-losing Alexa service by introducing a generative conversational AI with a two-tiered service, with access to the higher version costing around $5 a month, according to people with direct knowledge of the company’s plans.
The project, known internally as “Banyan” after the sprawling fig tree, marks the first major overhaul of the voice assistant since it was introduced with the Echo line of speakers in 2014. Amazon has named the new voice assistant “Remarkable Alexa,” the people said.
The sources, including eight current and former employees who worked on Alexa, spoke on condition of anonymity because they were not authorized to discuss the confidential project.
Amazon has told employees it is working toward an August deadline to have the latest version of Alexa ready, three of the people said, adding that Chief Executive Andy Jassy has a personal interest in reviving Alexa.
In an April letter to shareholders, Jassy promised a “smarter, more capable Alexa” but did not provide details.
The people cautioned that the company’s plans for Alexa, including pricing and release date, could change or be canceled depending on how Project Banyan progresses.
“We’ve already integrated generative AI into various components of Alexa and are working hard to implement it at scale to the more than 500 million Alexa-enabled ambient devices already in homes around the world to provide even more proactive, personal, and trustworthy assistance to customers,” an Amazon spokesperson said in a statement.
The service, which answers users’ questions like local weather and acts as a hub for controlling home appliances, was a personal project of Amazon founder Jeff Bezos, who envisioned the technology could mimic the fictional talking computer featured in the Star Trek television series.
Keeping up with rivals in generative AI is crucial for Amazon as Google, Microsoft and OpenAI have garnered more favorable attention for so-called chatbots that can respond almost instantly in complete sentences to complex prompts and questions.
The release of ChatGPT in late 2022 sparked an investment frenzy in AI companies, with chipmaker Nvidia overtaking the likes of Amazon in market capitalization to briefly become the world’s second-most valuable company.
Apple is also pursuing its own AI strategy, including updating Siri, the voice-activated software built into the iPhone, to add more conversational responses.
Some Amazon employees who worked on the project say Banyan is a “desperate attempt” to revitalize a service that has never made a profit, and that was caught off guard by the rise of competing generative AI products over the past 18 months.
Senior executives have told them this year is a crucial one for finally proving that the service can generate meaningful revenue for Amazon, the people said.
Alexa is primarily accessed through Amazon TV and Echo speaker devices, and is often used to set timers, quickly check the weather, play songs, and answer simple questions.
Amazon had hoped the service would help boost sales at its e-commerce business, but those hopes have been dashed, mainly because users want to see and easily compare the products they’re buying first.
The Seattle retailer is cutting thousands of jobs in the division in the second half of 2023 as part of a larger restructuring that comes as the pandemic-induced e-commerce surge loses steam.
“We have to win.”
Amazon expects that built-in AI will encourage Alexa customers to ask it for shopping advice, such as which gloves or hats to buy for a hiking trip, similar to a text-based service called “Rufus” that Amazon rolled out on its website earlier this year, the people said.
Some said senior executives told them 2024 was a “must-win” year for Alexa, the brand most closely associated with Amazon, along with Prime membership, Kindle and Fire devices.
However, the AI-powered version of the service demoed in September has yet to be made available to the public, while competitors have released multiple updates to their chatbots.
In the demo, Alexa lost its robotic cadence to answer questions like what time a football game was about to start. “You can now have a more human-like conversation with Alexa,” promised Dave Limp, then head of Amazon’s hardware division (who is now retired).
Amazon is working to replace the current free version, which it calls “Classic Alexa” internally, with an AI-enabled version and yet another tier that uses more powerful AI software to handle more complex questions and commands, for which users will have to pay at least $5 a month, some of the people said.
Amazon is also considering a price of around $10 per month.
A partnership with Amazon’s $139-a-year Prime membership is not being considered, the people said.
As envisioned, the paid version will let users perform more complex tasks like composing and sending a quick email or ordering dinner delivery through Uber Eats, all with a single command, some of the people said. It will also eliminate the need to say “Alexa” multiple times while interacting with the software, and offer more personalized features.
But officials said they didn’t understand why customers would be willing to pay for a service, even an improved one, that they now offer for free.
Amazon has also been plagued by botched AI development, challenges including hallucinations — when the software generates false or misleading information — and low employee morale within the division.
Some aspects of Amazon’s plans for the service have been previously reported by Business Insider, including struggles with the performance of the underlying AI and hopes for paid services, but Reuters is the first to report on the tiered pricing structure, internal deadlines and the possibility of a monthly fee.
Amazon is also looking to expand on the home automation offerings it offers through Alexa, according to the people.
Alexa can now wirelessly connect to so-called smart devices and control them by voice, allowing users to do things like turn on the porch light at 8pm every day.
But what’s notable is that Alexa will be able to learn from users and do things like turn on the TV to play your favorite weekly show or turn on the user’s coffee pot after their morning alarm goes off — something that’s now possible through prompts that Amazon calls “Routines.”
