Amazon Mulls $5 Monthly Charge For AI Alexa – Report

Amazon’s ongoing effort to bring in more money, will see the e-commerce giant charge a monthly subscription fee for its Alexa voice assistant.

Reuters, citing people with direct knowledge of the company’s plans, reported that Amazon is planning a major revamp of its decade-old money-losing Alexa service to include a conversational generative AI with two tiers of service.

It has considered a monthly fee of around $5 to access the superior version.

This is not the first time that a subscription fee for Alexa has been touted. Last month CNBC, which had cited people with knowledge of Amazon’s plans, had reported on plans to unveil an AI upgraded version of Alexa in 2024, which would charge a monthly fee.

Remarkable Alexa

According to the Reuters report, Amazon’s project to monetise Alexa is known internally under the name “banyan,” a reference to the sprawling ficus trees.

Amazon has dubbed the new voice assistant “Remarkable Alexa” the people told Reuters.

The sources include eight current and former employees who worked on Alexa, Reuters noted, with staff being pushed to meet an August deadline for the upgraded version of Alexa.

Three of the people reportedly noted that CEO Andy Jassy has taken a personal interest in seeing Alexa reinvigorated. In an April letter to shareholders, Jassy had promised a “more intelligent and capable Alexa,” without providing additional details.

The company’s plans for Alexa including pricing and release dates could be altered or cancelled depending on the progress of Project Banyan, the people cautioned.

“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,” an Amazon spokeswoman told Reuters in a statement.

“Desperate attempt”

Some of the Amazon employees who have worked on the project told Reuters that Banyan represents a “desperate attempt” to revitalise the service, which has never turned a profit, and was caught flatfooted amid the rise of competitive generative AI products over the past 18 months.

Those people said they have been told by senior management that this year is a critical one for the service to finally demonstrate it can generate meaningful sales for Amazon, Reuters reported.

Amazon is working to replace what it refers to internally as “Classic Alexa,” the current free version, with an AI-powered one and yet another tier that uses more powerful AI software for more complicated queries and prompts that people would have to pay at least $5 per month to access, some of the people said.

Amazon has also considered a roughly $10-per-month price, the sources told Reuters.

There will be no tie-in with Amazon’s $139-per-year Prime membership, the people said.

Jassy frustrations

The “classic” Alexa voice assistant has reportedly fallen out of favour with Amazon’s CEO Andy Jassy, despite it being heavily championed by former CEO and founder Jeff Bezos.

It is true that the voice assistant has never managed to create an ongoing revenue stream for Amazon.

Indeed, it has been suggested that just about every plan to monetise Alexa had failed, with one former employee previously branding Alexa “a colossal failure of imagination,” and “a wasted opportunity.”

Since its launch in 2014, Amazon made huge investments in Alexa and at one point, Amazon had 5,000 people working on Alexa and Echo.

But voice assistants such as Alexa and Apple’s Siri, used mostly to answer questions about the weather, play music, or set timers, are now facing a harsh new reality due to advanced AI models.

Andy Jassy’s lack of regard for the Alexa division was enhanced recently when he (as an avid sports fan) asked Alexa the live score of a recent game.

According to a person in the room, Jassy was openly frustrated that Alexa didn’t know an answer that was so easy to find online.

Alexa restructuring

Andy Jassy has heavily restructured Amazon’s Alexa division.

In November 2023 Amazon had axed more jobs within its Alexa division, and also axed a number of unspecified initiatives within the unit.

That was on top of the 27,000 jobs that Amazon had already axed since November 2022.

Indeed, such had been the cuts to the Alexa voice assistant division, it had previously prompted concern about the future of Echo devices and the Alexa voice assistant.

So much so that David Limp, who used to be Amazon’s senior vice president of Devices & Services – the division responsible for the Kindle, Echo hardware line and Alexa – had to reassure concerned Alexa customers when Amazon implemented those job cuts.

But matters were not helped in August 2023, when David Limp announced he was stepping down as boss of Amazon’s Devices & Services unit.

Limp subsequently became the head of the Jeff Bezos Blue Origin space venture.

Limp was replaced by Microsoft’s former product boss, Panos Panay, as head of Amazon’s devices division.

Amazon has meanwhile has spent a total of $4 billion backing AI startup Anthropic.