Amazon to Introduce Subscription Model  for Conversational AI-Powered Alexa Service

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Amazon is considering a major overhaul of its Alexa service, which has been unprofitable for a decade, by integrating a conversational generative AI and potentially introducing a subscription model with two tiers of services. Sources familiar with the company’s plans have indicated that Amazon is contemplating a monthly fee ranging from $5 to $10 for access to the advanced version.

Internally known as “Project Banyan,” named after the expansive ficus trees, this initiative marks the first major update to Alexa since its launch in 2014 alongside the Echo line of speakers. The new iteration is reportedly dubbed “Remarkable Alexa,” according to individuals who requested anonymity because they were not authorized to disclose confidential details.

Amazon has set an internal deadline of August to finalize the latest Alexa version, as CEO Andy Jassy has personally prioritized revitalizing the voice assistant. In his April letter to shareholders, Jassy hinted at a “more intelligent and capable Alexa,” though specifics were not provided.

An Amazon spokeswoman confirmed, “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.”

Originally a brainchild of Amazon’s founder Jeff Bezos, Alexa is designed to provide spoken responses to user queries, control home appliances, and more. However, it has never turned a profit. As competitors like Google, Microsoft, and OpenAI gain traction with their advanced chatbots, Amazon faces increasing pressure to innovate in generative AI.

The emergence of ChatGPT in late 2022 sparked a surge in AI investments, temporarily elevating chipmaker Nvidia’s market capitalization above Amazon’s and others.

Apple is also enhancing its Siri voice assistant to offer more conversational capabilities. Some Amazon employees involved in Project Banyan view it as a critical effort to rejuvenate Alexa’s commercial prospects after years of underperformance and recent layoffs in late 2023.