Following an increase in subscription costs and the introduction of advertisements on Prime Video, Amazon is contemplating introducing a subscription fee for its Alexa service, ranging from $5 to $10. This move aims to generate profits from the service, operating at a loss. The company plans to include conversational generative AI to make the offer more attractive, with two service levels available.
Amazon's CEO, Andy Jassy, is championing the project, internally referred to as Project Banyan. He is determined to revitalise the decade-old service.
Speculation about changes to Alexa began two years ago, following Amazon's decision to reduce its workforce by 10,000 positions towards the end of 2022.
According to sources cited by Reuters, Amazon has set a deadline of August 2024 to revamp Alexa. However, they also note that the pricing, launch dates, and even the continuation of the project are subject to change, depending on how the development is perceived to be progressing.
Alexa was introduced with considerable fanfare in 2014 as the first widely available digital assistant, designed to respond to voice commands and answer user inquiries. It was a favoured initiative of Amazon's founder, Jeff Bezos, and can connect to home appliances through a standard API, allowing for voice control of various devices.
Despite having sold over 100 million Alexa-enabled devices, public interest has waned in recent years.
In his annual letter to shareholders in April, Jassy hinted that Amazon is developing "an even more intelligent and capable Alexa" as part of a broader AI initiative within the company. He describes this as the next foundational element of Amazon's growth.
Jassy outlined three layers within the Generative AI (GenAI) framework, each of which is substantial and receiving significant investment from Amazon.
Jassy said the foundational layer is intended for developers and organisations that wish to create base models. This layer encompasses the computational power needed to train models and generate inferences and the software simplifying the model-building process. This is evidenced by Amazon's large-scale acquisition of Nvidia GPUs to power AI applications on dedicated servers within AWS data centres.
Amazon has made considerable investments in Trainium and Inferentia, its custom-designed AI chips optimised for AI training and inference tasks, respectively.
Jassy added that the intermediate layer is designed for customers who want to use an existing foundation model and its features to create a GenAI application. It is provided as a managed service.
However, Jassy anticipates Amazon will reap significant rewards at the topmost layer of the stack—the application layer —beginning with the monetisation of generative AI applications through the Alexa service and brand.
"We're constructing an extensive array of GenAI applications across all Amazon consumer divisions. These range from Rufus, our new AI-driven shopping assistant, to a more advanced and capable Alexa, to enhanced advertising capabilities that simplify the creation, customisation, and editing of high-quality images, advertising copy, and videos using natural language prompts, to productivity applications for customers and sellers," Jassy stated.
Project Banyan is part of this application layer, alongside a variety of applications that Amazon is developing.
Partners and AWS subscribers are expected to create numerous applications that operate on Amazon's technology within AWS data centres.