The new version of Alexa, called “Remarkable,” is set to be released in October and will utilize generative AI to answer complex queries. Amazon plans to charge a monthly fee of $5 to $10 for the Remarkable version, while still offering the free “Classic” voice assistant.

The move to partner with Anthropic is notable for Amazon, as the company typically relies on its own in-house technology to maintain control over the user experience, data collection, and customer relationships. According to Reuters, the decision came after initial versions of Remarkable Alexa using in-house software struggled to respond to prompts effectively.

The paid version of Alexa aims to offer more advanced features, including carrying on conversations that build on prior questions and answers. It will also provide shopping advice, aggregate news stories, and fulfill more complex requests, such as ordering food or drafting emails. Additionally, Amazon hopes the new Alexa will serve as a home automation hub, remembering customer preferences and automating tasks like setting alarms and recording favorite TV shows.

The success of the paid version of Alexa is crucial for Amazon’s efforts to generate meaningful sales and catch up with its rivals in the AI race. The company has been striving to convince users to shop through Alexa to increase revenue, but these endeavors have largely been unsuccessful, and the division remains unprofitable. Amazon aims to demonstrate Alexa’s revenue-generating potential by 2024, and the revamped paid version is seen as a key strategy to achieve that goal.

While Amazon has not disclosed the number of active Alexa users, Bank of America analyst Justin Post estimated that there are approximately 100 million active users. He predicted that around 10% of these users might opt for the paid version of Alexa, potentially bringing in at least $600 million in annual sales. However, skepticism remains among Amazon workers, who question whether customers will be willing to pay an additional fee on top of their existing Prime memberships.

As PYMNTS reported, Anthropic is currently facing a copyright infringement lawsuit filed by three authors, who allege that the company built its AI models, including Claude, through the unauthorized use of copyrighted works. This lawsuit follows a previous legal action against Anthropic by Universal Music and two other labels, which claimed that the AI firm used artists’ songs without consent to create similar copies of the lyrics. The lawsuit highlights the increasing challenges surrounding copyright infringement in the AI industry.

Despite these legal challenges, Amazon is pushing forward with its plans to release the new version of Alexa in October. The company has not disclosed the details of its agreements with Anthropic, and it remains to be seen whether Amazon will have to pay additional fees for the use of Claude in Alexa.

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Set to launch in October, the upgrade will reportedly transform the free voice assistant into a paid subscription service, according to the Washington Post, potentially reshaping the eCommerce giant’s customer engagement strategy. This move comes amid increasing regulatory scrutiny and industry-wide debates on AI integration in business.

According to internal documents obtained by The Post, Amazon is preparing to release a significant update to its personal voice assistant, Alexa. This revamp comes as the company faces increasing competition from AI voice assistants developed by rival tech firms. The upgrade will incorporate generative AI (GenAI) technology to enhance Alexa’s capabilities, marking an advancement in the assistant’s functionality.

“The bigger picture here is the evolution of Amazon’s strategy for monetizing its AI services,” Ghazenfer Mansoor, founder and CEO of the AI company Technology Rivers, told PYMNTS. “For a long time, the company’s approach was simple: offer cheap or free services to attract people, then rely on selling products and advertising. But as the cost of developing and maintaining advanced AI capabilities rises, it makes sense for companies to start exploring other revenue streams.”

When reached for comment, an Amazon spokesperson told PYMNTS: “We don’t have a comment on these rumors or speculation.”

Balancing Customer Loyalty and Brand Allegiance

The GenAI upgrade has the potential to significantly enhance Alexa’s conversational abilities. A key feature will be the new “Smart Briefing” tool, offering AI-generated daily summaries of news articles tailored to individual preferences. Users can also expect more natural dialogues, improved follow-up question handling and real-time language translation. The voice is also anticipated to sound more human-like.

While details remain undisclosed, the changes aim to transform Alexa from a simple voice assistant into a more sophisticated, companion-like application. This shift represents Amazon’s strategic move to monetize AI advancements and potentially set new standards in voice assistant technology.

“Amazon is likely to maintain a free tier of Alexa services to sustain customer loyalty and retention,” Simon Fletcher, engineering manager at Twingate, told PYMNTS. “The AI-powered Alexa subscription will serve as an upsell to this free tier, providing additional features and functionalities for those willing to pay. However, the key challenge will be ensuring the subscription model is compelling enough to attract and retain subscribers. Retention will largely depend on whether the paid features provide enough added value to justify the cost.”

Imposing a subscription fee for Alexa is likely to transform the eCommerce space, Ben Schreiber, head of eCommerce at Latico Leathers, told PYMNTS. “While customer loyalty is likely to be deepened by this initiative, it could also erode brand allegiance,” he said.

Schreiber elaborated on the dual nature of this move: “Pricing certain elements of Alexa’s enhanced features may elicit both positive and negative responses. On the positive side, those who want the most current technologies may be attracted to better AI, which could make for a much more engaging and user-friendly experience. Casual users can be converted into regular users by demonstrating worth through better and more effective service.”

However, he also warned of potential risks: “But there are dangers. A tendency is, some users who have been accustomed to using the free API features of Alexa may not welcome the subscription. Some of them may switch to [not paying for] such services which are continuously improving, like Google Assistant or Apple Siri.”

Enhanced Features and Justifying Costs

According to Schreiber, these enhancements could justify the subscription cost: “Such improvements transform Alexa from simply another voice device into a companion-oriented application, which may help people avoid feeling annoyed with the subscription charge.”

Introducing a subscription model for Alexa could signal a broader shift in Amazon’s approach to monetizing AI-driven services.

“Until now, Alexa was free and came with the sale of the hardware and Prime memberships,” Schreiber said. “Charging for premium features is the first sign that Amazon has self-acknowledged the potential of AI.”

“If Amazon succeeds, it could usher in a new era where AI is not just a tool, but a value-added service that people are willing to pay for,” Mansoor said.

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The updated app has new customization options and prioritizes frequently used smart home controls and Alexa features, Amazon said in a Friday (Dec. 1) press release.

One update is the inclusion of Favorites on the Home page, enabling users to access their most-used devices and features, according to the release. Favorites encompass a range of device types, including Echos, lights, plugs, switches, locks, cameras, thermostats and temperature sensors.

Another addition is the Shortcuts bar, which categorizes devices and showcases popular Alexa features, the release said. Users can customize the rotating carousel at the top of the Home page to display their preferred shortcuts. The Shortcuts bar also provides real-time updates on the status of connected devices.

The Activity section has been streamlined, with activity cards now stacked to optimize space on the Home page, per the release. The cards display time-sensitive information like timers, upcoming alarms or user-set reminders.

For Ring Protect subscribers, the Alexa app will soon allow viewing of up to six snapshots from connected Ring cameras directly from the Home page under Favorites, according to the release.

Amazon has also enhanced the chat experience with Alexa, the release said. Users can engage in conversations with Alexa through voice or text in a single location within the app. By tapping the blue chat indicator on any page, users can access to a chat experience, full-screen visual responses and suggested conversation prompts.

The Devices page has received improvements as well, per the release. Users can filter content by device type, sort devices, and search for devices by name or keywords. The List View and Map View options provide an overview of connected devices throughout the home.

The new Map View enables users to create a digital version of their home’s floor plan using a compatible iOS device, according to the release. Users can then pin their connected devices to the floor plan, allowing for easy access and control of smart home devices. The feature is currently available as a preview to select customers in the U.S.

PYMNTS Intelligence found that an additional 21 million people have adopted smart home gadgets over the past year. This is one example of how they continue to integrate digital into their daily routines, according to “The ConnectedEconomy Monthly Report: The Evolving Digital Daily.”

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The company will also expand developer benefits to help third-party developers generate more traffic and increase their skills’ visibility. Apple, Google and Microsoft recently announced similar cuts to their commission on developer revenue.

Amazon had planned for a voice app catalog, but found few developers who were able to capitalize on Alexa’s broad swath across the American landscape.

Many developers have had trouble having their skills discovered, finding that most people used their speakers and screens for only the built-in functions, such as controlling smart home devices, playing music, making shopping lists, setting timers, listening to news, and getting updates on weather or sports scores. Amazon has struggled to make inroads with voice-based shopping, too.

Amazon also announced new benefits to increase developers’ potential revenue under the new program starting next year, giving developers “up to an additional 10%” in potential revenue. Benefits include incentive programs and personalized feedback to help developers optimize their skills and identify monetization opportunities.

Earlier this year, Amazon launched Paid Skills, where consumers pay upfront to access the add-on voice app; introduced Alexa Shopping Actions to allow developers to sell within their skills; expanded access to in-skill purchases to more international developers; and reduced the cost of hosting skills.

Related news: Alexa Together Service Debuts, Calling on Advances in Remote Connected Eldercare

Earlier this month, Amazon officially rolled out its Alexa Together service, which connects seniors and caregivers, replacing the free Alexa Care Hub with a new subscription service that adds features for elders, special needs users, caregivers and loved ones. Alexa Together is available as a six-month free trial and is then priced at $19.99 per month or $199 per year.

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First announced during Amazon’s fall hardware event in September, Amazon Together replaces the previously free Alexa Care Hub with a new subscription service that adds key features for elders, special needs users, caregivers and loved ones. Offered as a six-month free trial and then priced at $19.99 per month or $199 per year, Alexa Together is a big step in Amazon’s connected home strategy.

As Toni Reid, vice president of Amazon Alexa, told USA Today, “what we were really humbled by is that there’s a lot of customers who maybe are less tech-savvy and/or have special needs and were getting a lot of benefits out of Alexa and the far-field voice technology. It inspired us to think about this customer segment in a dedicated way.”

As The Verge reported, among the standout features of Alexa Together “are Urgent Response and a fall detection capability. This adds 24/7 hands-free access to a professional emergency helpline, allowing the user to say ‘Alexa, call for help’ to an Echo speaker and be connected with an agent. The agent can then request the dispatch of police, the fire department or an ambulance, and Alexa also sends a notification to the designated caregiver.”

See also: Amazon Announces Home Robot, Ring Drone, Elder Care Service, ‘Hey, Disney,’ More

Valuable New Features, Subscription Bundles

For the home user, all that’s required is an Alexa-enabled smart device such as the Amazon Echo, Echo Dot or Echo Show. Caregivers are able to monitor elders and others needing remote care on smartphones using the Alexa Together app.

Though it’s going from free to subscription-based, popular preexisting features like “Drop In” and video chat are supported in the new Alexa Together package. Current Care Hub users will reportedly receive a free year of Alexa Together service before a subscription is required.

Fall detection is one of the new features getting the most buzz. CNET reported that “Alexa Together incorporates fall detection from two third-party companies, Assistive Technology Service (ATS) and Vayyar. Vayyar Care is a wall-mounted sensor that can detect when a fall occurs. SkyAngelCare by ATS is a fall-detection pendant worn around the neck. When Vayyar Care detects a fall or the loved one presses the SkyAngelCare pendant button, Alexa receives a signal to ask if they would like to call Urgent Response.”

Other new features include activity alerts showing caregivers that an Alexa Together user is active and engaging with the system, but without disclosing the nature of their interactions.

Remote Assist allows authorized caregivers to do everything from set reminders to create shopping lists to program music, only after they’ve been given permissioned access.

Amazon has begun promotions for the service, bundling the Alexa-enabled Echo Show 8 video touchscreen device with a six-month free trial of the Alexa Together service for $94.99

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Pairing Blue Apron recipes with Alexa aims to enable easier home cooking and more culinary exploration as cooks prepare their meals with hands-free instructions on Alexa devices, according to Blue Apron.

“We continue to add more product flexibility that addresses our customers’ diverse cooking interests and desire for unique flavors,” said Dani Simpson, Blue Apron’s chief marketing officer. “This is just the start of our work with Alexa as we look forward to expanding this partnership in 2022.”

Customers can also choose from a selection of meal kits to order each week through the device, according to the announcement.

The new partnership comes at a time when Blue Apron is struggling to stay front of mind for post-lockdown customers who have since returned to restaurant dining. In August, the company reported a customer base of 375,000, which reflects a loss of 16,000 customers from the prior quarter and a decrease of 21,000 from the previous year, as PYMNTS reported. In comparison, the company had more than one million customers during its peak in the first quarter of 2017.

Read more: Blue Apron Struggles to Hold Its Own Against Restaurants

In September, Blue Apron launched a “Heat & Eat” add-on for subscribers, which includes single-serve, ready-made frozen meals that can be reheated in five minutes or less. Earlier this year, the company added appetizers and side dishes to their meal kits, as well as meat and seafood options that feature curated spices.

According to a pre-pandemic survey, while 19% of U.S. adults have tried a meal kit service, only 38% have continued their subscriptions.

See also: Blue Apron’s New Frozen Meals Add Value for High-Churn Subscription Service

Blue Apron’s most recent joint effort with Alexa is part of an effort aimed at doubling the number of partnerships in 2022, according to the company.

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By simply asking Alexa to dial or answer calls through smart speakers, Verizon customers can now outsource another trivial task to their omnipresent digital assistant, according to a Tuesday (Nov. 16) announcement that noted its new feature would be called Number Share – Home. 

For a monthly fee of $5 per phone line, customers can sign up for Number Share – Home and then link their mobile number to one or more Amazon Alexa-enabled Echo, Echo Dot and Echo Show devices through the Alexa app. They can then place and receive calls hands-free by asking Alexa. 

“Almost everything works just like you’re using your actual phone,” the company says in a video promoting the new service, which it dubs “smart calls through your smart home.”

Making Calls Through Smart Speakers 

When announcing Number Share – Home, Verizon outlined a number of potential benefits. For example, customers can make calls through the smart speaker even when their phone’s battery is dead. They can dial calls hands-free by telling Alexa either the number or the contact’s name. 

In case of an emergency, users can say, “Alexa, call 911” or ask Alexa to call an emergency contact. So long as the user has previously provided an address, that address will be displayed to emergency services. 

In routine use, the user’s mobile phone number will be displayed on the other party’s device during a call made through the smart speaker, just as it would be if placed through the mobile phone. 

Customers can also stop incoming calls on the smart speakers by setting up Alexa Routines and saying “Alexa, I’m leaving home,” or during specified times or by using the Do Not Disturb mode in the Alexa app. 

Becoming the Operating System That Connects it All 

As PYMNTS reported in the aftermath of Amazon’s annual fall preview of its new hardware and voice-activated capabilities, the online retailer’s Alexa platform is set to become the operating system that connects it all. 

Read more: Amazon Alexa Announcements Point to Connected Living Writ Large

As its ecosystem continues to scale in new directions, more of Amazon’s long game is coming into focus. It’s about being embedded in consumers’ lives as an operating system not just for devices but for many aspects of living in the connected economy. 

“Alexa, introduced by Amazon in November of 2014, turned a cylinder called Echo into a voice-activated device that sat mostly on kitchen counters at home and gave its users a new way to access the internet,” PYMNTS CEO Karen Webster wrote in a Sept. 20 opinion piece. 

See: Voice Operating Systems Like Alexa Will Power the Connected Economy: Here’s Why

“The intent was for Alexa to become the operating system for the connected economy, embedding its voice-activated operating system into the growing number of devices that were or could be connected to the internet,” she added. 

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In fact, when announcing its second-quarter results, Amazon reported that there are now more than 900,000 registered developers, brands and device-makers building with Alexa. Among the most recent ventures includes a six-year collaboration with Ford to bring Alexa to millions of retail and commercial vehicles in North America. And then last week, a second announcement by Samsung’s Appliance Division noted that Alexa would work alongside its own personal voice assistant, Bixby, which controls its refrigerator.

The Connected Hardware Trend 

With so many registered developers, brands and device makers working with Alexa, Amazon’s commitment to connected hardware has never been more clear.

An article published by global managing consulting firm McKinsey & Company says that Amazon focuses on leveraging and building out its ecosystem: “All these devices come equipped with Alexa voice activation, enabling consumers to buy product seamlessly on Amazon, which represents an important part of the company’s expansion of its commerce channels.”

Setting the Stage 

Noting that many of the items the company sold during a Prime Day were own Alexa-enabled hardware devices, the article pointed out that big, prominent deals drove sales for Alexa-enabled devices and set the stage for easy, seamless voice-controlled product ordering.

Indeed, this year Amazon itself reported that during the most recent Prime Day, when Prime members purchased more than 250 million items, the Fire TV Stick 4K with Alexa voice remote was the most popular item purchased.

Smart speakers, too, are something sold under Amazon’s own brand. Why did Amazon choose speakers among all the smart devices that it could manufacture?

International Data Corporation (IDC), a provider of market intelligence, advisory services and events, noted that in Europe, smart speakers represented 25.8 percent of the smart home market in the fourth quarter of 2019. That was up 3 percent compared to a year earlier and the category was expected to grow at a compound annual growth rate of 15.6 percent through 2024.

Amazon Alexa was the leading voice assistant with a market share of 58.3 percent of all devices. “With new models launched in the last quarter of the year, Amazon continued to gain market share, supported by the good performance of smart speakers and digital media adapters.”

Driving Higher Levels of Engagement 

In an article published by strategy, research and analyst firm Futurum Research, Daniel Newman wrote that Amazon is working to make Alexa-enabled devices more proactive and engaging like mobile devices. Currently, many people use the Alexa platform only for basic functions like setting reminders and playing music.

“As more companies create voice assistant skills to tap into this market and reach customers, having useful skills like these that can drive higher levels of engagement will only continue to rise in importance.”

In its 2020 annual report, Amazon said customers have connected more than 100 million smart home devices to Alexa.

With more Alexa-equipped devices doing more things, whether those products are manufactured by Amazon or other registered developers, consumers have become more and more accustomed to turning to Alexa and Amazon when they need something.

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The update is intended to roll out by the end of August on Apple‘s iPhone and tablets as well as other devices running Google‘s Android. Amazon’s own Fire tablets will also run the program, CNBC reported.

The reason for the change, according to CNBC, is the current Alexa app’s often difficult template, which offers random and superfluous prompts from the homescreen and makes users sift through various menus to access some settings. The update from Amazon, by contrast, promises to put users’ most-used features at the easiest place to access, meaning someone who primarily uses Spotify will have a different homescreen from someone who uses an Audible book alarm or a shopping list.

In addition, the button to open Alexa will now be located at the top of the screen as opposed to the bottom, CNBC reported, which will also relocate reminders, routines, skills, settings and other features to an easier-to-find place on the screen.

Alexa has been the most popular Apple app download, according to a PYMNTS report from December. The holiday season spurred use of the popular app used to help set up a device.

Amazon has worked to update Alexa as of late, with another PYMNTS report from December noting that the popularity of such apps has necessitated updates to make them more natural and lifelike. Alexa was modified to respond in more of a happy or sad tone based on what a user asks.

And according to PYMNTS statistics, the number of people who have made purchases with voice-activated technology reached around 75 percent in December. Thirty-one percent reported owning a voice-activated device, and 30 percent said their overall satisfaction of the app increased when Alexa responded with emotions.

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The new update will do away with the old method of having to tap a button on the phone to launch the app before it would begin taking requests. Now, Alexa users will be able to call up the app with Siri or Google Assistant, then speak with Alexa like normal, requesting to turn on music or set the temperature to a certain level, TechCrunch reported.

Once the wake word has been detected, an animated blue line signifies that Alexa has woken up and is ready to go, streaming requests to the cloud.

Amazon said the new feature will only work when the phone is unlocked and the Alexa app is open on the screen, and it won’t work at all if the phone is closed or the app hasn’t been activated, according to TechCrunch. The company said this new feature will be rolled out over the next several days. To use the new Alexa feature, users will have to update the Alexa app to the latest version.

The pandemic has boosted interest in voice-assisted commerce, which has thus far not been a huge part of the market — as PYMNTS reported, people aren’t as keen to ask Alexa to make a purchase for them as they would be to ask it to turn on a song.

But with the pandemic’s necessity of people staying inside and not wanting to touch surfaces for fear of catching the coronavirus, reports have emerged already of hotels and cruise ships making use of voice controls to help customers feel more secure.

In addition, voice controls could be coming more to grocery stores with a recent partnership between Google and French grocery chain Carrefour. Using that technology, shoppers would be able to link their Google and Carrefour accounts and add items to a shopping list just by saying the name out loud.

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