Tech Tonic | Amazon has no clue what to do with Alexa, and the Echo family

Amazon, this week, announced their Q3 results. On a macro view, you’d probably find all seems well. I wasn’t so sure, and dug a little deeper. Conspicuous by its absence in the financial report was any significant mention of the Echo smart devices. Of which Amazon has quite a few up for sale. Andy Jassy, Amazon president and CEO, did specifically reference the Kindle e-readers, Prime Big Deal Days, some fixtures on Prime Video, and “100 new cloud infrastructure and AI capabilities that we’ll share at AWS re:Invent.” Someone has to say it. Amazon has blown its first mover advantage.
There was a time when the smartness, slickness and versatility of Echo smart devices and the companion smart home ecosystem was coveted. There was variety and utility. A choice of smart speakers and smart displays, across price points. Now, Echo devices just feel long in the tooth. Choose any of these devices still on sale, and the experience remains exactly as it was when they first arrived on the scene. Nothing about my interactions with an Amazon Echo Show now, feel significantly different to 2019, when it was launched (and I fondly remember my time at HT’s sister publication, Mint, where I’d written about it at the time).
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A glimmer of hope but that too is fading fast. Reminds me of September last year, and that remarkable demo in which David Limp, who was then Amazon’s head of devices and services, said “Alexa, let’s chat” and proceeded to give us a glimpse of the vision for the smart assistant that made smart assistants cool (sorry Google, Hey Google became cool because Alexa taught us smart assistants). A free flowing natural conversation with an AI assistant that sounded a lot different from what we know Alexa to sound like. Simply, better. The plan was, to have it available starting with the US, a few months later, with global availability at some point earlier this year. None of it has transpired according to plan.
This envisioned evolution for Alexa was, and is, important. It’d have meant that crucial step forward from being a smart assistant, to a full-fledged AI chatbot. It’d have meant Amazon’s Alexa large language model (LLM) competing with OpenAI’s GPT which also underlines Microsoft Copilot, Google Gemini, Meta AI, Perplexity and a fast evolving Apple Siri which too will add OpenAI’s models as an optional port for call for users. A “super agent”, if you may, without throwing a shade on the capabilities of Alexa as we’ve known it over the years.
After pushing a case for smart assistants for years, tech companies suddenly found better value arriving elsewhere. “They were all dumb as a rock,” is how Microsoft CEO Satya Nadella described smart assistants such as their own Cortana, in an interview earlier this year. To digress for a moment, this tells a lot about how tech companies see us consumers as guinea pigs willing to spend money for that privilege. Nevertheless, I’ll take that up some other time.
What does one make of Amazon’s investments in AI company Anthropic, the latest being in March this year (this follows an earlier investment announcement in September last year), to the tune of a reported $4 billion. If the company wanted to replicate what Microsoft has with OpenAI for the new Alexa, it certainly didn’t have the perseverance or attentiveness to do so. Anthropic has the very capable Claude chatbot, and they know what they’re doing.
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The reality is not just that Alexa hasn’t really changed in the past year as we’d have expected it to; it seems Amazon believes it is a good idea to put the refurbished, smarter Alexa behind a subscription paywall. Want a smarter chatbot on your smart speakers and smart displays? Pay $10 (or so; this is still a guess) a month. If not, keep using the older, less smart Alexa. After almost a decade of having Alexa available for free to users, Amazon is simply adding more resistance in a path it should logically leave undisturbed.
If they have any intent of competing with AI companies that have built better chatbots and are much ahead in the generative models stakes. But then again, Amazon must be thinking if Tinder can have a subscription tier, if Evernote can still have the courage to demand a subscription, cloud storage expenses, and if Google or OpenAI can have subscriptions to unlock smart AI features, they can too. But, are any of them on as shaky a ground as Amazon are?
The Amazon Echo complication
Software and the smart companion is one part of Amazon’s AI problem. The other piece of that puzzle, is the Echo device line-up. Over the years, some iterations have worked while some haven’t at all. That’s par for course for any tech portfolio, but the funny thing is, most successes have come from the initial years of Amazon’s Echo journey. I’ll give you a virtual line in the sand — no Echo product since the redesigned Echo in 2020 and (if you really want to stretch it) the second generation Echo Show in 2021, has really caught attention.
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I mean, you wouldn’t be queuing up for an Echo Pop. Then there is also the small matter of Amazon never really prioritising India for Echo releases. Incidentally. Statista’s data suggests that as of February 2024, India registers the highest percentage of smart speaker ownership among 56 countries, with 38% of respondents saying they have a smart speaker at home. The United Kingdom was the second highest ranking country. This audience, in this part of the world, never got the battery powered Tap, the Echo Wall Clock, the Echo Loop smart ring and that gorgeous Echo Hub touch display which can be wall mounted too (I was personally rooting for this; alas, that holds little value in the face of Amazon’s own resistance).
There doesn’t seem to be much in the pipeline in terms of the hardware side of things, to get you interested. In fact, Amazon may find competition is much tougher and rougher to contend with, than it perhaps did around 7 years ago when Echo devices arrived in India. The stagnation in the Echo smart device hardware, is symptomatic of wider sluggishness. Whether that’s because of structural issues within Amazon, or Alexa LLM not being up to the mark (thought that seems unlikely), is concerning.
The summary doesn’t make for pretty reading. It has been regularly mentioned that Amazon executives have labelled 2024 as a “must win year” for Alexa, with that division remaining unprofitable over the years. If charging for a “Remarkable Alexa” is their idea of finding success, they may just find that 2024 is fast running out. The ecosystem needs strong Amazon play in the consumer AI space.