Edgar Cervantes / Android Authority
TL;DR
- Amazon has incurred over $25 billion in losses from Alexa-powered gadgets between 2017 and 2021.
- This has prompted the company to develop a subscription-based new and improved Alexa with generative AI capabilities.
- However, people working on the project remain skeptical of its success, citing concerns about technology readiness and consumer willingness to pay for previously free features.
Amazon’s plan to launch inexpensive Alexa-powered gadgets as a way to secure long-term financial success seems to have backfired in a significant way. Having incurred losses of over $25 billion between 2017 and 2021 due to the tech, the leading retailer is now looking to launch a paid version of Alexa to mitigate its financial setbacks. However, will this new version of Alexa be enough to turn the tide for Amazon? Employees seem to think otherwise.
According to a report from The Wall Street Journal, Amazon is racing to launch the paid subscription as soon as this month. But engineers working on the product worry that the updated version of Alexa won’t take off as expected. An employee revealed to the WSJ that “the technology isn’t there, but they have a deadline.”
The technology, which rumors say will cost up to $10 per month, is expected to have more generative AI capabilities than the current version of Alexa, and that’s certainly a selling point. Still, expecting users to subscribe to a technology that they so far had free access to might be a tall ask. Until now, Amazon relied on gadgets like the Echo speakers to build a user base for Alexa. The retail giant hoped that its customers would use Alexa to make big-ticket purchases on Amazon. However, most people use Alexa to check the time or get weather updates, which does not convert into financial gains for the company in any way.
With a subscription-based Alexa possibly just weeks away from a wide roll-out, Amazon is banking heavily on the idea that people will be willing to pay a recurring flat fee to use an AI model that can do more advanced things than Alexa currently can. While this would be a sound strategy in normal times, we now have access to a range of AI assistants, from ChatGPT to Gemini and more, that don’t cost anything to use, at least for the base version. In these times, Amazon’s revamped Alexa might not exactly spell success for the company, but only time will tell if consumers will perceive enough value in the new offering to justify the recurring cost.
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