On a rainy Saturday morning in 2016, I found myself at home babysitting my five- and seven -year-old granddaughters. The bouncy house was closed that day, we had watched more videos than I wanted them to watch, we had a tea party under the dining room table… they were bored and in need of distraction. It was at that moment that I remembered that Alexa could tell knock-knock jokes. The next 45 minutes were magical. Unforgettable, actually. But that was nine years ago, and Alexa hasn't progressed much since.
Amazon knows this better than anyone. With Alexa Voice Services embedded in more than half a billion devices, the service is underutilized and unprofitable.
According to Amazon, this will all change on Feb. 26 when they announce a revamped, generative-AI-powered Alexa designed to engage in multi-turn conversations and act on behalf of users – a major leap from the current version, which handles only single requests.
Executives will hold a final "Go/No-Go" meeting on February 14 to determine if the AI-powered Alexa is ready for launch. Initially, the new service will be rolled out to a limited number of users for free, though Amazon has considered a subscription fee of $5 to $10 per month. The company will continue offering “Classic Alexa,” but has halted new feature additions to that version.
The new Alexa integrates AI technology from Anthropic, an AI startup in which Amazon has invested $8 billion. Despite delays due to concerns over response accuracy and speed, Amazon expects the AI-powered assistant to enhance daily tasks, from scheduling to shopping. Analysts at Bank of America estimate that if just 10% of active Alexa users subscribe at $5 per month, the service could generate $600 million annually.
If successful, the generative AI upgrade should reposition Alexa as a key player in AI-driven personal assistants.
Knock, knock. Who’s there? Alexa. Alexa who? Alexa-dentally spent all your money on Amazon. My bad!
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Shelly Palmer is the Professor of Advanced Media in Residence at Syracuse University’s S.I. Newhouse School of Public Communications and CEO of The Palmer Group, a consulting practice that helps Fortune 500 companies with technology, media and marketing. Named he covers tech and business for , is a regular commentator on CNN and writes a popular . He's a , and the creator of the popular, free online course, . Follow or visit .
