Amazon is considering a premium AI-powered Alexa service for $5-10 per month

Amazon is reportedly considering a major overhaul of its Alexa service, potentially introducing a monthly fee for access to an advanced AI-powered version. The move, if confirmed, could represent a significant change in the way consumers interact with one of the most recognizable voice assistants on the market.

Amazon first showed off an early version of the new Alexa in September 2023. The company then expected a launch in “early 2024,” but has yet to ship anything or provide updates.

According to exclusive reports from Reuters, the e-commerce giant is considering a monthly fee of $5 to $10 for access to an AI-enhanced version of Alexa. The planned modernization, codenamed “Project Banyan”, includes the introduction of two levels of services. The current free version of “Classic Alexa” will remain available, but a premium tier based on advanced AI features will be offered for a monthly fee. This is not expected to be included with the $139 annual Prime membership.

Despite its popularity, Alexa struggles to turn a profit. The service was largely used for simple tasks such as setting timers, checking the weather, and playing music. Amazon’s efforts to boost e-commerce sales through Alexa have failed, leading to significant layoffs in the division last year.

The new AI-powered Alexa, dubbed “Alexa Extraordinary” by insiders, is expected to offer more human conversations and advanced capabilities. Sources familiar with the project indicate that the premium version could handle complex tasks such as writing emails, ordering meals and executing multi-step commands – all from a single prompt.

The success of OpenAI’s ChatGPT has intensified the race to develop more sophisticated AI assistants. And competitors like Google, Microsoft, and Apple are making significant strides in generative AI.

Amazon CEO Andy Jassy has reportedly taken a personal interest in reviving Alexa, setting an ambitious internal deadline for August to complete the project. This urgent need underscores Alexa’s strategic importance to the broader Amazon ecosystem, which includes its e-commerce platform and smart home devices.

But Amazon faces an uphill battle, with some employees expressing doubts about customers’ willingness to pay for a service that is currently free. Additionally, the company faced technical challenges and low morale within the department.

With internal sources citing 2024 as a “must win” year, the pressure is on Amazon to actually deliver an “extraordinary” experience that justifies the cost. But the big question is whether consumers will be willing to pay for a service that has traditionally been free. The added functionality may appeal to tech enthusiasts and heavy users of smart home devices, but convincing the broader market may be difficult.