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Amazon has postponed the launch of its next-generation AI-powered upgrade to Alexa until next year, according to a new report from Bloomberg. The upgrade, originally rumoured for an October 2024 launch, is said to have faced a slew of challenges during development.
While the all-new Alexa is purportedly able to handle more complex queries — like writing a draft email or ordering multiple meals with a single prompt — it struggles with basic tasks that the current model can breeze through, like starting a timer or operating smart lightbulbs, sources within the Seattle-based firm revealed to The Verge.
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Internal challenges within the business have also contributed to the delay, with some employees citing overstuffed management and a lack of clear vision for what an AI-enhanced Alexa should do as the biggest obstacles.
Amazon already offered a sneak peek of how large language models will enhance Alexa during its annual hardware event, held at its corporate headquarters in Arlington, Virginia in September last year.
In a live demo on-stage, Amazon devices boss Dave Limp revealed how the latest iteration of the assistant would be more expressive in its responses – for example sounding happier when returning a positive score result for your favourite sports team.
Not only that, but by saying “Let’s Chat” to Alexa, users can speak with the virtual helper without the use of the wake phrase “Alexa” every time, making each exchange feel more conversational and natural. You’ll even be able to pick up a conversation after a short break and Alexa will still remember all of the context from the previous exchanges.
This could dramatically enhance Alexa's usefulness around the home. For example, the AI would learn that it's always asked to power-on a television for a favourite weekly show at the same time, or start a fresh coffee pot after the morning alarm goes off — allowing it to automate all of these tasks.
Dave Limp promised that Alexa can understand inferences and more vague prompts in a way that he described will be “like talking to a friend”. For example, the new Alexa can respond to the prompt “I’m cold” by turning on the heating in a connected home.
"You can now have near-human-like conversations with Alexa," promised Dave Limp at the time. The executive has since left Amazon.
According to reports, Amazon will keep the existing iteration of its voice-activated assistant around for the foreseeable future, which will be rebranded as "Classic Alexa". This will be available free of charge to anyone with an Amazon Echo, Fire TV, Fire Tablet, or other hardware from the shopping company.
The second-generation version of Alexa will only be accessible with a monthly subscription, with rumoured pricing between £3.99 and £7.99 a month. This move is seen as an attempt to recoup significant investments in AI technology. Amazon has funnelled a reported $4 billion into AI research company Anthropic to help train its reimagined Alexa on large language models, known as LLMs.
Unfortunately, the Alexa subscription will not be discounted for those who subscribe to Amazon Prime at £95 per year, whispers from within the company claim.
Amazon Echo owners could be charged a monthly fee to access the next major upgrade for voice assistant, Alexa, which will seemingly tap into the next generation of AI models AMAZON PRESS OFFICE While there's no sign of the new Alexa launching this side of Christmas, Amazon CEO Andy Jassy remains bouyant about the potential of adding generative AI to its Alexa assistant, stating during a recent earnings call that it's a "once-in-a-lifetime type of opportunity".
Reassuring shareholders that its vast investment into AI would eventually become a lucrative part of the business, Andy Jassy said: "I think we've proven over time that we can drive enough operating income and free cash flow to make this a very successful return on invested capital business."
The hardware division within Amazon, which includes the likes of Kindle e-readers, Fire TV Stick and other streaming devices, custom-designed Smart TVs, Fire tablets, and more, has reportedly incurred substantial losses in recent years.
According to sources speaking to The Wall Street Journal, the division lost approximately £25 billion between 2017 and 2021. This financial strain is part of the motivation to consider a paid subscription for the next iteration of the Alexa smart assistant, sources claim.
Earlier this year, a report published by analysts from Bank of America, led by Justin Post, did some (very) rough calculations for Fortune to guesstimate how much money could be generated by a subscription to Alexa.
Even if just one in five Echo devices sold remains active to this day with a unique user, that equates to 100 million active users globally. If 10% of those Amazon device owners decide it's worth spending $5 a month for an improved Alexa experience, that would generate $600 million a year in revenue for Amazon. At $10, it's looking at $1.2 billion.
Even with limited adoption — and the Bank of America analysts were deliberately conservative in their estimates due to the tough competition from free-to-use alternatives like ChatGPT and Google Gemini, not to mention the uncertainty about whether people even want to use this type of generative AI with a hands-free gadget, like Amazon Echo — it would begin to claw back some of the losses from the Amazon devices division.
Alexa is already capable of a number of clever features, like controlling smart home gadgets, scheduling calendar appointments and alarms, answering trivia questions, and making calls
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Coupled with other recent initiatives, like the decision to show adverts in Prime Video for the first time earlier this year — a controversial decision that prompted enraged users to kickstart a lawsuit against Amazon, it's clear that Amazon is pushing hard to increase profits beyond online shopping.
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When approached by Fortune about its long-rumoured plans to charge for Alexa, a spokesperson for Amazon said: "Our vision for Alexa remains the same — to build the world’s best personal assistant. Generative AI offers a huge opportunity to make Alexa even better for our customers.
"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.
"We are excited about what we’re building and look forward to delivering it for our customers."
