Amazon's gen AI-powered Alexa is coming – how much it could cost you

Amazon might soon reveal the next generation of Alexa, one equipped with AI skills. At a press event scheduled for Wednesday, Feb. 26, the company reportedly will introduce the long-delayed and much-anticipated Alexa generative AI voice service, Reuters said on Wednesday.

The new generative Alexa

Citing intel from three people familiar with the matter and an internal planning document, Reuters reported that Amazon executives have a “Go/No-go” meeting slated for Feb. 14. That meeting will determine the “street readiness” of Alexa’s generative AI enhancement to ensure the revamp is ready for customers.

On Wednesday, Amazon sent out press invitations for the Feb. 26 event to be held in New York and hosted by former Microsoft executive Panos Panay, who now heads Amazon’s devices and services team. A spokesperson confirmed to Reuters that the event will focus on Alexa but declined to provide any details.

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Alexa’s generative AI voice service will be able to respond to multiple prompts one after the other in a single conversation. The AI version will also act as an agent to carry out tasks on its own and remember preferences when recommending music, restaurants, and other items. As an example given by Reuters’ sources, you could order a hamburger for delivery but then modify the order before your food is actually sent out.

It might not be free like ‘classic’ Alexa

The new Alexa will be compatible with existing devices, according to the sources. Amazon will first offer the new voice service to a limited number of early users for free. Beyond that initial rollout, the company reportedly has been considering charging $5 to $10 a month for the AI-powered Alexa. The free version, to be called Classic Alexa, would still be available at no cost.

Alexa currently can handle a wide variety of requests. I use Alexa for several tasks, including playing music, providing weather forecasts, setting a timer or reminder, playing games, controlling smart home devices, and even ordering products. But it still seems limited compared with the AI services offered by OpenAI, Microsoft, and Google. For example, Alexa currently can handle only one request at a time and lacks the conversational skills of a true AI chatbot.

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An infusion of AI could prompt people to turn to Alexa more often. The new version may also help Amazon financially. Since its inception, Alexa has been a money loser, costing the company billions of dollars. Charging a monthly fee may start to reverse that trend, assuming enough customers sign up. Bank of America analysts have forecast that Amazon could bring in $600 million each year if only 10% of active Alexa users, with around 100 million devices, pay $5 a month for the service.

An AI Alexa has been in the works for a while. Amazon first announced such plans in late 2023 with an expected launch in 2024. But the project has suffered delays, which Reuters’ sources blamed on concerns over the quality and speed of the responses. With the official unveiling seemingly set, we’ll have to see if an Alexa with AI powers will be worth the wait.