Amazon Eyes $5-$10 Monthly Fee for Alexa Service Revamp

According to sources, is considering a $5 monthly fee for the premium version of its decade-old money-losing Alexa service, which will include a conversational generative AI

The project, internally referred to as “Banyan” in honor of the sprawling ficus trees, would be the first significant overhaul of the voice assistant since its introduction in 2014 in conjunction with the Echo line of devices.

Amazon has designated its latest voice assistant as “Remarkable Alexa,” according to the sources.

The sources consist of eight current and former employees involved in Alexa who spoke anonymously due to their lack of authorization to discuss confidential projects.

Three individuals stated that Amazon has urged employees to prepare the most recent version of Alexa by the end of August.

They also mentioned that CEO Andy Jassy has expressed a personal interest in revitalizing Alexa. Jassy pledged to shareholders in an April letter that a “more intelligent and capable Alexa” would be implemented, but he did not furnish any further information.

The individuals advised that the company’s plans for Alexa, which include pricing and release dates, may be modified or canceled in response to the advancement of Project Banyan.

“We have already integrated generative AI into different components of Alexa and are working hard on implementation at scale—in the over half a billion ambient, Alexa-enabled devices already in homes around the world—to enable even more proactive, personal, and trusted assistance for our customers,” a spokesperson for Amazon stated in a statement.

The service, which can function as a hub to control home appliances and provide spoken responses to user inquiries such as the local weather, was a pet project of Amazon founder Jeff Bezos. Bezos envisioned a technology that could replicate the fictional voice computer depicted in the Star Trek series on television.

Amazon must remain competitive in generative AI, as Google B, Microsoft, and OpenAI have received more favorable attention for their chatbots, capable of responding to complex prompts or queries with complete sentences almost instantly.

The release of ChatGPT in late 2022 sparked a wave of investment in AI firms. It propelled chipmaker Nvidia past Amazon and other companies in market capitalization, momentarily becoming the world’s second-most valuable company.

Apple (AAPL.O) is also advancing its AI strategy, which includes revising its Siri voice-activated software embedded in iPhones to provide more conversational responses. This consists of the opening of a new tab.

According to certain Amazon employees who contributed to the project, Banyan is a “futile” endeavor to revive the service, which has never generated revenue and was caught off guard by the proliferation of competitive generative AI products in the past 18 months.

According to those individuals, senior management has informed them that this year is crucial for the service to prove its ability to generate substantial sales for Amazon.

Alexa, primarily accessible through Amazon TVs and Echo speaker devices, is famous for setting timers, quickly accessing the weather, playing songs, and answering basic inquiries.

The service has yet to be able to increase Amazon’s e-commerce sales, primarily because users prefer to view the products they are purchasing before making a purchase, making it easier to compare.

In late 2023, the Seattle retailer implemented a significant restructuring that eliminated thousands of positions within the unit. This move was made in response to the waning momentum of an e-commerce boom fuelled by the pandemic.

‘MUST WIN’

Due to the embedded AI, the individuals stated that Amazon anticipates that Alexa customers will request advice, such as which gloves and hat to purchase for a mountain climbing trip. This service is similar to Rufus, a text-based service that Amazon implemented earlier this year on its website.

Some individuals have reported that senior management has informed them that 2024 is a “must-win” year for Alexa, which, along with the Prime membership, Kindle, and Fire devices, is the brand most closely associated with Amazon.

However, the service’s AI-powered version, showcased in September, has yet to be made available to the general public, even though competitors have implemented numerous updates to their chatbots.

During the demonstration, Alexa shed its robotic demeanor and responded to inquiries such as the commencement time of a football game.

Dave Limp, Amazon’s hardware executive at the time, assured users that they could now engage in conversations with Alexa that were nearly human-like. Limp has since departed the company.

Some individuals have stated that Amazon is in the process of replacing the current free version of Alexa, which it internally refers to as “Classic Alexa,” with an AI-powered version and an additional tier that utilizes more powerful AI software for more complex queries and prompts.

This tier would require a minimum monthly fee of $5. They also stated that Amazon has contemplated an approximately $10 monthly price.

According to the individuals, Amazon’s $139-per-year Prime membership needs to be considered.

Some individuals stated that the paid version could carry out more complex tasks, such as composing a brief email, sending it, and ordering supper for delivery from Uber Eats, all from a single prompt, as initially intended.

They also stated that it could eliminate the necessity of repeatedly saying “Alexa” during a conversation with the software and provide greater personalization.

However, the individuals expressed their inability to comprehend why consumers would be inclined to pay for a service currently available for free, even if it were redesigned.

Amazon has also encountered difficulties in developing AI, including false starts, poor employee morale in the division, and hallucinations, which occur when software generates inaccurate or misleading information.

Business Insider had previously reported on Amazon’s plans for the service, which included its aspirations for a paid service and its challenges with the performance of the underlying AI. However, Reuters is the first to report on the tiered pricing, internal deadline, and potential monthly fee.

According to the sources, Amazon strives to enhance Alexa’s home automation capabilities. Alexa can now establish a wireless connection with them to enable voice control of smart devices. For instance, a user can activate the porch lighting every evening at 8 p.m. with this capability.

However, Remarkable Alexa has the potential to learn from users to activate the television for a user’s preferred weekly program or activate the coffee kettle after a morning alarm is sounded. This is currently feasible through Amazon’s Routines, which are prompts.

According to specific individuals, customers must acquire additional Alexa-enabled devices for the service to function effectively.

People familiar with the matter previously informed Reuters that the company had been developing devices last year to expand the service to additional house rooms, including Alexa-enabled home energy consumption monitors and a carbon monoxide detector.