Amazon's Alexa to Compete with ChatGPT: How External Partnerships Will Play a Role
Amazon is set to launch a revamped version of its Alexa voice assistant in October, just ahead of the U.S. holiday season. This new iteration, internally known as “Remarkable,” will leverage Anthropic’s Claude AI models instead of Amazon’s own AI technologies, according to sources familiar with the matter.
New Pricing and Features
The updated Alexa will come with a subscription fee of $5 to $10 per month. This version aims to deliver advanced capabilities through powerful generative AI, providing more nuanced and accurate responses to complex queries. Despite this paid upgrade, Amazon will continue offering the original “Classic” Alexa for free. The decision to integrate Claude’s AI follows challenges faced by earlier versions of Alexa, which experienced delays in response times and performance issues. According to insiders, the in-house AI struggled with responsiveness, prompting Amazon to partner with Anthropic for improved functionality.
Why the Shift to Anthropic’s AI?
Amazon’s shift towards using Anthropic’s Claude AI is a strategic move to enhance Alexa’s performance. While the company traditionally develops its own technologies, it is not uncommon for tech giants to partner with other firms for specific advancements. For instance, Microsoft and Apple have collaborated with OpenAI for similar reasons. Claude, developed by the AI startup Anthropic, has demonstrated superior performance compared to Amazon’s in-house models, leading to its selection for the new Alexa iteration. This decision marks a significant shift in Amazon’s approach, typically centered around using its proprietary technology.
What to Expect from the New Alexa
The upgraded Alexa will feature several enhancements:
Conversational Memory: The new Alexa is designed to carry on conversations that build on previous interactions, offering a more personalized user experience.
Advanced Assistance: It will provide sophisticated shopping advice, aggregate news stories, and handle complex tasks such as ordering food or drafting emails from a single command.
Enhanced Home Automation: The upgraded Alexa aims to be a more effective home automation hub, remembering user preferences for tasks like setting morning alarms and recording favorite TV shows.
Potential Challenges and Market Impact
Despite these upgrades, there are concerns about the pricing of the new Alexa. Some users may be hesitant to pay $60 to $120 annually for a service that is currently free, especially given the additional cost of Amazon Prime memberships. This skepticism could impact the adoption rate of the new version. Bank of America analyst Justin Post estimates that around 100 million active Alexa users exist, with about 10% potentially subscribing to the paid version. This could generate at least $600 million in annual revenue, assuming the lower end of the pricing spectrum.
Future Developments and Regulatory Scrutiny
Amazon’s investment in Anthropic, announced in September last year, includes a $4 billion commitment, promising early access to new technologies. However, details about any additional payments for using Claude in Alexa remain undisclosed. Amazon, along with Alphabet’s Google, is also facing a formal investigation by the UK’s antitrust regulator regarding the impact of its investment in Anthropic on market competition.
The revamped Alexa, set to debut at Amazon’s annual devices and services event, represents a significant step forward in the evolution of voice assistants. With advanced AI capabilities and new features, it aims to maintain Alexa’s relevance in a competitive landscape.
