The last time we heard from Amazon.com Inc. Chief Executive Officer Andy Jassy, he was breaking it to investors that his company was forecasting $100 billion in capital expenditures this year — the largest outlay of the tech giants in the pursuit of artificial intelligence.
It is understandable, then, why he’s eager to explain how AI is already being put to use. On Wednesday, at an event in New York, the company made a strong pitch that Alexa, its often-mocked smart voice assistant, has been given a new purpose — and a new business model — thanks to generative AI.
With the usual (and crucial) caveat around not being allowed to try the tech out directly for ourselves at the launch event, the assembled journalists and analysts came away distinctly impressed. If Alexa works as advertised, Amazon has made it relevant again.
The update is the first revamp since the arrival of ChatGPT. That moment, which turned the tech world upside down, made Alexa’s clunky, primitive use cases seem embarrassingly prehistoric. Competing AI could write essays, generate images and write software code. Alexa’s primary use was to set kitchen timers or play music.
Looming over the Alexa business was whether the company could ever use the hundreds of millions of Alexa devices out there in the world to drive meaningful revenue for Amazon. At first, it was thought people would “speak” their Amazon orders to Alexa — but too few did. Then it was hoped third-party developers would build apps for Alexa, as they do for smartphones, that could spur use cases that turned a profit that Amazon could share. That didn’t happen either — Alexa users had no good way of finding out these apps even existed.
Amazon then set about sticking Alexa into anything it could. Presentations became a roll call of dead-on-arrival devices. A janky pair of glasses. A microwave oven. A little robot on wheels named Astro. Eventually, Amazon’s executive in charge of Alexa, Dave Limp, departed for Jeff Bezos’ rocket company. As I wrote at the time, he left having never cracked the challenge of making Alexa live up to its promise.
Enter Panos Panay. The charismatic Greek-American was poached by Amazon from Microsoft Corp. in September 2023. I’d met him several years earlier when he was launching, with much enthusiasm, a two-screened smartphone that nobody bought. I’d found his hiring an odd choice — I wondered if his arrival at Amazon might mean even more wacky ideas for Alexa.
Thankfully, he seems to have taken the opposite course, giving Alexa a focus not seen since the days when it was a Bezos passion project. Instead of a parade of form factors, there were just a couple on stage Wednesday: a small picture-frame screen and a TV, neither of them new hardware. There are, of course, a whole heap of Alexa-enabled smart home devices, but it is clear the company has finally succumbed to the reality that Alexa is best controlled by seeing as well as hearing.
To emphasize this further, Amazon is launching alexa.com — a web-browser based version that is a clear effort to encroach on ChatGPT, Perplexity, Claude and others. For the first time, Alexa users can forward things like emails or housing agreements to the service so they can be queried in plain English later — “When is football practice?”; “Can I install a solar panel on my house?”
Can it compete with those market leaders? Amazon is banking on the Alexa brand being a friendlier gateway to AI — more recognizable and trusted to the vast majority of consumers who may feel bewildered by the AI tools geared toward the more technically savvy corners of the population.
To get there, Amazon believes its integrations and partnerships with third-party services will set them apart. This stands a far greater chance of succeeding this time around. On Alexa+ — which Amazon will make free for Prime members; $19.99 a month otherwise — there are “tens of thousands” of integrations with external services like Uber, Grubhub and OpenTable. The screen will mean users will be capable of being prompted to use things they might not initially be aware of. Recent advancements in natural language processing will mean that any reasonable variation of “book me an Uber,” for example, will be understood and acted upon.
After years of searching, these integrations look like the first real hint at a significant business model for Alexa. One demonstration, which made use of a partnership with Ticketmaster, involved asking Alexa to source baseball tickets for a coming game. Alexa replied and showed various seating options that could be purchased within the chatbot. If a user felt the tickets were too pricey, however, they could ask to be alerted if and when the price fell below a desired level. The value to Ticketmaster, getting an eventual sale from a customer who might have otherwise walked away, is obvious — and Amazon will presumably take its cut from these kind of arrangements (though no details of the partnership were disclosed).
Once you start stacking up these integrations — buy baseball tickets, book a dinner nearby, schedule an Uber, set a calendar invite, text friends with the details — you start to see the direction Alexa is headed. Its implementation within Alexa makes ChatGPT’s alternative — the haphazard Operator agent — look extremely overengineered (though admittedly more flexible).
We learned from the iPhone that simplicity, security and ease of use is what makes a platform fit for the masses, even if it didn’t get there first. Alexa+ is the first AI “agent” I’ve seen that seems ready for the normal population: a conversational, accessible bot that — unlike others in the market — doesn’t seem at risk of going off the rails at any moment.
Amazon’s more palatable pitch to use its bot is less about talking up AI’s role in humanity but AI’s role in your home. What’s more, these new additions will work with several Alexa devices already out there in their many millions. It’s a hardware install base Amazon’s AI rivals would kill for. Apple investors, fresh off recent AI embarrassment, might be wondering why Cupertino didn’t get there first.
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