Ten years ago this November, Amazon released a breakthrough device with an understated tweet.
“Introducing Amazon Echo,” it read. “Always ready, connected, and fast. Just ask.”
Buried within the subsequent announcement was the introduction of Alexa, too, which quickly captured the minds of consumers young and old on its way to becoming a cultural phenomenon. Coming on the heels of Amazon’s Fire phone flop, the release felt even more astonishing.
For a period of time in my household, Alexa felt like magic. Sure, we queried it for weather updates and asked it to serve as a timer during cooking. But it was the ability for our young kids to start a post-meal dance party by uttering just a few words that, looking back, my wife and I remember the most fondly. No, the speaker didn’t have the greatest sound. But it was more than passable and the moments it helped create for our family were delightful.
The problem for Amazon, eventually, was that our usage of Alexa never translated into real incremental revenue or profit for the company once the Echo was in our house. We didn’t shop from the company any more than we did before and slowly stopped engaging overall as much as we once did. Over time, Alexa started to sound more desperate, too, offering us suggestions we had no interest in after an answer to our actual query was given. Along the way, Amazon was still spending billions with no real return in sight.
Then, ChatGPT and the generative AI boom happened, and Alexa was caught flat-footed as my colleague Sharon Goldman reported in depth. Now, a gen AI-powered version of Alexa could be announced as early as this month, but it is expected to come with a monthly fee. Yes, Amazon has half a billion Alexa-powered devices out in the world, but it may be an uphill battle to convert enough existing users to a paid version years after the popularity of the original Alexa peaked.
If unsuccessful, it’s fair to wonder how Amazon CEO Andy Jassy would react. He hasn’t been afraid to course-correct and cost-cut aggressively in his three years as chief executive. He could decide that Amazon’s AWS cloud business, with its multiple positions in the AI land grab, is enough.
Then again, a 500-million device footprint is massive and Amazon has pleasantly surprised the masses and the media before, as the early years of Alexa proved. Can they do it again?
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Jason Del Rey
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The rest of today's Data Sheet was written by David Meyer.
