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Why it’s time for Amazon’s Alexa to get a makeover

When Amazon executives take the stage on Wednesday during its fall event, which is happening for the first time at its second headquarters in Arlington, Virginia, the focus could be on how the company’s long-term investments in artificial intelligence (AI) will power its new lineup of products. With the way its rivals – Google and Microsoft — are leading the pack in the Generative AI space, the spotlight is firmly on how Amazon supercharges its devices with AI and looks at the next chapter of Alexa.

“Amazon is investing heavily in AI, particularly for its retail business where AI is used to optimise the customer experience. However, the company has not shared a lot of details on how AI is being used in other parts of its business,” Ben Wood, chief analyst and CMO at CCS Insight tells indianexpress.com. “We expect this to be one of the themes at its forthcoming fall event.”

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The e-commerce giant was one of the first major tech companies to put artificial intelligence into the Echo smart speakers way back when people didn’t know what AI could do. The Echo was powered by Alexa, the name of Amazon’s personal digital assistant which lets you use voice commands to control its devices for features like streaming music, news reports, or even turning on your smart lights. The Echo was a huge hit and it not only helped break Amazon into the smart home segment but also pushed the company to get serious about making the hardware. Amazon has been making successful Kindle readers since 2007 but the success of the Echo smart speakers was instrumental in extending Amazon’s lead in AI more than actually making a profit out of selling the hardware.

Echo Dot Amazon’s head of devices David Limp addressing the press at the company’s 2019 fall event (Image credit: Anuj Bhatia/The Indian Express)

Now, years later, Amazon still sells the Echo line of smart speakers and displays which are powered by Alexa. In fact, now everything from TVs, home security systems and microwaves to cars have built-in Alexa. While Amazon has succeeded in its ambition to put Alexa into basically every device, somehow it feels like its voice assistant hasn’t matured enough despite the company’s promise of a future where a virtual assistant would answer questions or help accomplish tasks.

“I think both Alexa and Siri got stuck in time and they are behind the curve as far as great voice assistance goes,” says Jaspreet Bindra, Managing Director and Founder of The Tech Whisperer. “It is a phenomenal opportunity with the reach that Amazon and Apple have, especially with Alexa to now build an Alexa 2.0 on Generative AI, and completely revamp the product with absolute human-like voice interactions. The same thing you think that ChatGPT can do – think of it happening with voice through Alexa at your home.”

Amazon took a different approach when it created the Alexa-powered Echo, putting the giant online seller ahead of Google in building a technology that interacts as humans do. But lately, all Big Tech companies are going into generative AI and Amazon cannot afford to lose. Hardware may be a small part of Amazon’s core business but it was the Echo smart speaker line where Alexa, which uses artificial intelligence to understand what users are saying and respond conversationally with the best answers, made the most impact.

Amazon event Amazon’s pair of Alexa-enabled glasses. (Image credit: Anuj Bhatia/Indian Express)

“I don’t think Amazon is falling behind in the AI race against Google and Microsoft. They have been pioneers of AI, using AI across all their products for the last couple of decades,” says Bindra. However, unlike Microsoft and Google who have created chatbots for consumers, Amazon is yet to show a comparable product using generative AI tools.

Alexa’s strong presence in the smart home segment gives the company a key advantage over rivals, who have traditionally been focused on making apps for computers and smartphones. Because Amazon’s own devices and the products made by others have additional sensors and cameras, that can add context to Generative AI queries. Not only do these smart home products help Generative AI queries, but they also take action. That way Alexa can be more conversational in nature. However, for Amazon, the challenge would be to address security and privacy. The issue of hallucinations, a tendency of AI models to spew inaccurate information, also remains a challenge.

The pressure is mounting on Amazon to recognise a big shift in the way consumers want to interact with their devices. Experts believe that AI chatbots like ChatGPT have made Alexa outdated but the question remains how long Amazon will beef up its voice assistant and add a generative AI spin to it? Generative AI’s impact on Alexa could be huge, analysts believe.

At this week’s event, experts and insiders expect to see a clear strategy from Amazon on where it currently stands in the generative AI arms race. With Dave Limp, Amazon’s SVP of devices and services, planning to retire in the coming months and the recent layoffs that jolted the company’s hardware division, the e-commerce giant’s products could look quite different in the future.

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“Alexa continues to be an important area for Amazon and we’ll hear more about efforts in this area at the fall event. However, there have been a series of job and budget cuts to the Alexa programme over the last 12 months and we believe some projects have been scaled back or abandoned,” Ben added.

Amazon has made a name in the hardware space with hit products like Kindle and Echo, but there have been questions on how it will monetise the Echo and Alexa platforms in future. Under Jeff Bezos, Amazon betted on long-term strategy with the hardware but the new Chief Executive Officer Andy Jassy has taken steps to make changes in its low-margin and costly hardware divisions. For Amazon, there still is some way to go before it really cracks the formula with its hardware products.

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Wednesday’s event won’t have any surprises and Amazon will more likely announce iterative updates to its products such as smart speakers, Kindle and Eero routers. There’s no reason to expect shock and awe.

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