“If this fails to get revenue, Alexa is in trouble.”
A quote from an anonymous Amazon employee in a Wednesday Business Insider report paints a dire picture. Amazon needs its upcoming subscription version of Alexa to drive revenue in ways that its voice assistant never has before.
Amazon declined Ars’ request for comment on the report. But the opening quote in this article could have been uttered by anyone following voice assistants for the past year-plus. All voice assistants have struggled to drive revenue since people tend to use voice assistants for basic queries, like checking the weather, rather than transactions.
Amazon announced plans to drive usage and interest in Alexa by releasing a generative AI version that it said would one day require a subscription.
This leads to the question: Would you pay to use Alexa? Amazon will be challenged to convince people to change how they use Alexa while suddenly paying a monthly rate to enable that unprecedented behavior.
Workers within Amazon seemingly see this obstacle. Insider, citing an anonymous Amazon employee, reported that “some were questioning the entire premise of charging for Alexa. For example, people who already pay for an existing Amazon service, such as Amazon Music, might not be willing to pay additional money to get access to the newer version of Alexa.”
“There is tension over whether people will pay for Alexa or not,” one of the anonymous Amazon workers reportedly said.
Subscription-based Alexa originally planned for June release
Amazon hasn’t publicly confirmed a release date for generative AI Alexa. But Insider’s report, citing “internal documents and people familiar with the matter,” said Amazon has been planning to release its subscription plan on June 30. However, plans for what Insider said will be called “Alexa Plus” and built on “Remarkable Alexa” technology could be delayed due to numerous development challenges.
According to the report, the Remarkable Alexa tech has been being demoed by 15,000 customers and currently succeeds in being conversational but is “deflecting answers, often giving unnecessarily long or inaccurate responses.”
In September, then-SVP of devices and services at Amazon David Limp demoed Alexa understanding more complex commands, including Alexa not requiring the “Hey Alexa” prompt and being able to understand multiple demands for multiple apps through a single spoken phrase.
Insider reported: “The new Alexa still didn’t meet the quality standards expected for Alexa Plus, these people added, noting the technical challenges and complexity of redesigning Alexa.”
“Legacy constraints”
According to the report, people working on the original Alexa insisted on using what they had already built for the standard voice assistant with the paid-for version, resulting in a bloated technology and “internal politics.”
However, the original Alexa is based on a natural language model with multiple parts doing multiple things, compared to the colossal large language model of generative AI Alexa.
Now, generative AI Alexa is reportedly moving to a new technological stack to avoid the “legacy constraints” of today’s Alexa but potentially delaying things.
An inarguable need for “remarkable”
Amazon has to do something to turn Alexa into a viable revenue source. In late 2022, Insider reported that Alexa was on track to lose Amazon $10 billion that year. The following months were filled with numerous layoffs at Amazon, including, most recently, a November 2023 round said to largely target Amazon’s devices and services division and, per an email reportedly seen by Business Insider, some of Amazon’s AI team.
As such, Alexa is under more pressure, with presumably fewer hands trying to make a profitable Alexa. Considering Amazon has yet to figure out how to get customers to use Alexa in revenue-driving ways, that’s a tall order.
Beyond the voice assistant’s longstanding financial problems, generative AI research and development is extremely expensive. In September, Limp told Bloomberg that “the cost for inference of the model in the cloud is substantial.” Around the same time, Amazon announced minority ownership in Anthropic, saying it would invest up to $4 billion to develop large language models.
Perhaps hinting at the “Remarkable Alexa” name used in Insider’s report, Limb also told Bloomberg that Alexa “has to be remarkable” before Amazon could charge for it, but that charging for the voice assistant was “not decades away.”
But maybe half a year (if the June target date is accurate) is too soon. The need for Amazon’s version of generative AI to meet, if not surpass, expectations can’t be overstated. With users already averse to using Alexa for complex tasks, they won’t dedicate time and responsibilities to Amazon’s generative AI if it requires dealing with glitches, inaccuracies, and inconveniences on top of subscription fees. And that’s not to mention the privacy concerns associated with Alexa, present or future.
On the other hand, time is a luxury Alexa doesn’t have since Amazon is playing catch-up. Amazon isn’t too late to the game, but a rushed, imperfect debut could solidify it as a non-factor. And with paid-for voice assistants already an extremely hard sell, the Alexa team has its work cut out for it.
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