Amazon Bets on Anthropic's AI to Revamp Alexa as Paid Service Releases in October

As of last week, Amazon (AMZN) saw a 3.71% increase, marking a two-day gain of 4.51%. Over the past week, the stock has risen by 0.82%, bringing the year-to-date increase to 17.48%. The company's latest market capitalization stands at $1,873.459 billion.

According to sources, Amazon's revamped AI voice assistant, Alexa, will be powered by a core model from Anthropic called Claude, rather than Amazon's own AI model. The new “exemplary version” of Alexa is expected to come with a monthly fee of $5 to $10, and it is slated for release in October.

Amazon had previously disclosed in June that efforts were underway to enhance Alexa by integrating generative AI. This new version aims to handle more complex user queries while maintaining a free “classic” voice assistant option.

However, the initial iteration of the new Alexa, integrated with Amazon’s internal software, faced challenges, including delays of up to six to seven seconds in recognizing prompts and responding.

Consequently, Amazon turned to Anthropic's AI model Claude, which outperformed Amazon's own models when embedded in Alexa. Anthropic, supported by both Amazon and Alphabet, is recognized as a significant player in the AI field.

Amazon's “classic” voice assistant primarily plays music, sets timers, and answers basic questions, but efforts to leverage Alexa for increased sales have largely been unsuccessful. Alexa is commonly accessed via Amazon TV and Echo speakers.

This year, Amazon's senior management emphasized that 2024 will be crucial for Alexa to prove its potential in generating meaningful sales. The revamped paid version is seen as a key strategy to achieve this goal and stay competitive.

A spokesperson from Amazon stated, “Amazon utilizes various technologies to power Alexa, including our own AI models like Titan and others from partners, to deliver the best experience for our customers.” The “exemplary Alexa” is expected to be previewed in September at Amazon's annual device and services event.

The paid version of Alexa aims to offer high-efficiency conversations similar to ChatGPT, providing enriched shopping recommendations and assisting users with tasks such as drafting emails and managing work documents.

Amazon mentioned that the future of the new technology would depend on its alignment with internal standards, leaving room for potential delays or changes to the Alexa plan.

In the realm of AI chatbots, Amazon is committed to revitalizing Alexa with generative AI technology, in direct competition with Google and Microsoft's offerings. Unlike the advanced general-purpose AI chatbots like ChatGPT and Google’s Gemini, Amazon has yet to make significant strides. The company's previous AI chatbot efforts, such as Amazon Q, were focused on AWS cloud services rather than general-purpose AI.

Apart from Amazon, companies like Microsoft and Apple are also integrating OpenAI's GPT-4 into their flagship products, while Google continues to embed its own Gemini model into core services.

Overall, Amazon’s aggressive push to innovate with Alexa and leverage Anthropic’s AI model Claude underscores the company's strategic focus on AI to compete with industry giants and improve user experience.

The latest developments reflect Amazon's broader goal of enhancing its technological capabilities and maintaining a competitive edge in the evolving AI landscape.