Amazon Echo Show 8 with Alexa Faces Pressure to Drive Revenue, Subscription Version in the Works
In a recent report by Business Insider, an anonymous Amazon employee expressed concerns about the future of Alexa, stating, “If this fails to get revenue, Alexa is in trouble.” This sentiment reflects the challenges faced by all voice assistants in generating revenue, as users primarily rely on them for basic queries rather than transactions.
To address this issue, Amazon announced plans to release a generative AI version of Alexa that would eventually require a subscription. However, convincing users to change their behavior and pay a monthly fee for a voice assistant poses a significant challenge. Some Amazon employees have questioned the idea of charging for Alexa, especially for those who already pay for existing Amazon services like Amazon Music.
According to internal documents and insider sources, Amazon had initially planned to launch its subscription-based Alexa, called “Alexa Plus,” on June 30. However, development challenges have potentially delayed the release. The new technology, known as “Remarkable Alexa,” has been demoed by 15,000 customers but still needs improvement in terms of accuracy and response time.
The report suggests that the original Alexa’s technology was incorporated into the paid version, resulting in bloated software and internal conflicts. To overcome these limitations, generative AI Alexa is moving to a new technological stack, but this transition may cause further delays.
Amazon is under pressure to turn Alexa into a profitable revenue source. In 2022, Alexa was projected to cost Amazon $10 billion, leading to layoffs within the company. The challenge lies in finding ways to monetize Alexa and encourage users to engage in revenue-driving activities.
Developing generative AI technology is also costly, with substantial expenses for cloud inference and research and development. Amazon has invested in Anthropic and plans to spend up to $4 billion on developing large language models. David Limp, former SVP of devices and services at Amazon, emphasized the need for Alexa to be “remarkable” before charging for it.
However, the rush to meet the June release date may compromise the quality and performance of generative AI Alexa. Users are already hesitant to use Alexa for complex tasks, and glitches and inaccuracies could further deter them from subscribing. Privacy concerns surrounding Alexa also add to the challenges faced by Amazon.
While Amazon is not too late to enter the generative AI market, a flawed debut could diminish its impact. Convincing users to pay for voice assistants is already difficult, and the Alexa team has a tough task ahead in ensuring a seamless and compelling user experience.