People are using their Alexa speakers as glorified timers, and it's cost Amazon $25 billion – but is AI the answer?

Amazon has sold millions of Echo smart speakers, but its smart home devices are still making a massive loss according to internal documents and those with inside knowledge of the business. Now, Amazon CEO Andy Jassy is trying to turn things around – but it's not going to be easy.

It's widely rumored that Amazon will soon be introducing a paid tier for Alexa , with an AI-enhanced version of the smart assistant available as a monthly add-on to Amazon Prime subscriptions. However, according to The Wall Street Journal (paywall), the company made over $25 billion in losses from its smart device business between 2017 and 2021.

While a paid-for service could go some way towards filling that hole, it will be a tough challenge – particularly since many people only use Alexa's most basic functions, and may therefore be unwilling to pay extra for AI-enhanced services.

"We worried we’ve hired 10,000 people and we’ve built a smart timer," one former senior employee told the Wall Street Journal.

AI-enhanced Alexa

The AI-enhanced service, said to be known internally as 'Remarkable Alexa', could cost $5 or $10 a month, which would provide an extra source of revenue for Amazon's device business alongside Kindle subscriptions and Ring home security plans.

However, 'Remarkable Alexa' will face stiff competition. Google is preparing to launch a new service that merges Google Assistant with Bard , with a price yet to be announced, and at last month's WWDC 2024 conference, Apple unveiled a major upgrade for Siri powered by Apple Intelligence , which is free for users.

Amazon has yet to confirm any details about a premium tier for Alexa, but it's suggested that the supercharged service could arrive later this year. We'll keep you updated as soon as we know more.

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