Amazon Echo Show 8 with Alexa Faces Challenges in Driving Revenue, According to Insider Report
In a recent report by Business Insider, an anonymous Amazon employee expressed concerns about the upcoming subscription version of Alexa, stating, “If this fails to get revenue, Alexa is in trouble.” This sentiment reflects the struggle that all voice assistants face in generating revenue, as most users primarily utilize them for basic queries rather than transactions.
Amazon’s plan to drive usage and interest in Alexa involves releasing a generative AI version that would eventually require a subscription. However, convincing users to change their behavior and pay a monthly rate for this new version presents a significant challenge. Some Amazon employees have questioned the premise of charging for Alexa, particularly for those who already pay for existing Amazon services like Amazon Music.
While Amazon has not publicly confirmed a release date for the generative AI Alexa, internal documents and sources cited by Insider suggest that the subscription plan, called “Alexa Plus,” was initially planned for a June 30 launch. However, development challenges may cause delays. The current version of generative AI Alexa, known as “Remarkable Alexa,” has been demoed by 15,000 customers but still needs improvement in terms of accuracy and response length.
One of the main obstacles in developing generative AI Alexa is the legacy constraints of the original voice assistant. The technology used for the standard version does not align with the colossal large language model of generative AI Alexa. As a result, the development team is working on a new technological stack to overcome these constraints, potentially causing further delays.
Amazon’s urgency to turn Alexa into a viable revenue source is evident. In 2022, Alexa was projected to cost Amazon $10 billion, leading to subsequent layoffs within the company. However, finding ways to monetize Alexa remains a challenge. Additionally, the research and development of generative AI is costly. Amazon has invested billions of dollars in developing large language models and acknowledges that Alexa must be “remarkable” before charging for it.
While the June target date for the subscription-based Alexa release may be ambitious, Amazon cannot afford to wait too long. The success of generative AI Alexa hinges on meeting or surpassing user expectations. Users are unlikely to embrace a subscription-based voice assistant that comes with glitches, inaccuracies, and privacy concerns. However, a rushed and imperfect debut could also harm Amazon’s position in the market. The Alexa team faces an uphill battle in convincing users to pay for their voice assistant while delivering a seamless and remarkable experience.