Amazon will use AI startup Anthropic rather than its own artificial intelligence to power an improved version of Alexa for online retailers due to launch in October, five people familiar with the matter told Reuters.
The Seattle-based company plans to offer a new “Remarkable” version of Alexa, which uses powerful generative AI to answer complex questions, for $5 to $10 per month, but will continue to offer its “Classic” voice assistant for free. Reuters reported. In June.
But early versions of the new Alexa, using in-house software, struggled to recognise words and sometimes took six to seven seconds to recognise and respond to a prompt, one of the sources said.
Alexa's limitations have cost the company billions of dollars. According to internal documents reviewed by the Journal..
So Amazon turned to Anthropique's AI chatbot, Claude, which had been performing well, the sources said.
Though not as large as rival OpenAI, which owns ChatGPT, Anthropic has become a major force in the AI industry: The startup has raised nearly $7 billion in funding in the past year alone, down from $8 billion in funding.
Amazon has been pouring resources into its smart-devices division for years, even though sales there aren't particularly profitable.
Staff hoped that customers would buy the device and then talk to Alexa to shop on Amazon. In theory, selling the device wasn't the profit-generating part of the business, but future sales on Amazon.com were.
But most customers were simply using their smart devices to answer questions, play music, set timers, and more.
“I was concerned because they employed 10,000 people and they made smart timers,” a former Amazon employee previously said. He told the Wall Street Journal.
Amazon is on track to sell more than 500 million Alexa devices as of 2023. But between 2017 and 2021, the company lost more than $25 billion on its devices business, The Wall Street Journal reported.
That means Alexa devices are under pressure to turn a profit this year, especially from Andy Jassy, who took over as CEO in 2021. Jassy has his sights set on cutting costs, and the smart devices business will reportedly be cut.
“Amazon uses a variety of technologies to power Alexa,” an Amazon spokesperson told the Post. “When it comes to machine learning models, we start with those built by Amazon, but have used and will continue to use a variety of models, including Titan, future Amazon models, and models from our partners, to provide the best experience for customers.”
The company declined to say whether Anthropic's Claude was one of those models.
Amazon's Alexa team is primarily focused on competing in the AI sprint, people familiar with the matter told Reuters.
Employees said they doubted customers would pay $60 to $120 a year for services that are now free, especially on top of Prime membership.
The premium Alexa will be able to respond to more complex commands, such as giving customers shopping advice, ordering food delivery and drafting emails, according to sources.
Amazon hopes the device will become a helpful assistant that can remember things customers tend to forget, like setting daily timers, the people said.
Sources say the release of this advanced Alexa could be delayed if it doesn't meet certain standards.
Bank of America analyst Justin Post estimated in June that there are roughly 100 million active Alexa users, and that about 10% of them might buy a paid version of Alexa, generating $600 million in annual revenue.
Amazon announced last September that it would invest $4 billion in Anthropik and give customers early access to the startup's technology.
It's unclear whether Amazon will pay Antropic an additional investment to build Alexa using Cloud.
Google has invested at least $2 billion in Anthropic.
Amazon and Google are facing an antitrust investigation in the UK looking into whether their partnership stifles competition.
