Amazon turns to Anthropic's Claude for Alexa AI revamp
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[August 30, 2024] By
Greg Bensinger
SAN FRANCISCO (Reuters) - Amazon's revamped Alexa due for release in
October ahead of the U.S. holiday season will be powered primarily by
Anthropic's Claude artificial intelligence models, rather than its own
AI, five people familiar with the matter told Reuters.
Amazon plans to charge $5 to $10 a month for its new "Remarkable"
version of Alexa as it will use powerful generative AI to answer complex
queries, while still offering the "Classic" voice assistant for free,
Reuters reported in June.
But initial versions of the new Alexa using in-house software simply
struggled for words, sometimes taking six or seven seconds to
acknowledge a prompt and reply, one of the people said.
That's why Amazon turned to Claude, an AI chatbot developed by startup
Anthropic, as it performed better than the online retail giant's own AI
models, the people said.
Reuters based this story upon interviews with five people with direct
knowledge of the Alexa strategy. All declined to be named as they are
not authorized to discuss non-public matters.
Alexa, accessed mainly through Amazon televisions and Echo devices, can
set timers, play music, act as a central hub for smart home controls and
answer one-off questions.
But Amazon's attempts to convince users to shop through Alexa to
generate more revenue have been mostly unsuccessful and the division
remains unprofitable.

As a result, senior management has stressed that 2024 is a critical year
for Alexa to finally demonstrate it can generate meaningful sales - and
the revamped paid version is seen as a way both to do that and keep pace
with rivals.
"Amazon uses many different technologies to power Alexa," a company
spokeswoman said in a statement in response to detailed Reuters
questions for this story.
"When it comes to machine learning models, we start with those built by
Amazon, but we have used, and will continue to use, a variety of
different models - including (Amazon AI model) Titan and future Amazon
models, as well as those from partners - to build the best experience
for customers," the spokeswoman said.
Anthropic, in which Amazon owns a minority stake, declined to comment
for this story.
AI PARTNERSHIPS
Amazon has typically eschewed relying on technology it hasn't developed
in-house so it can ensure it has full control of the user experience,
data collection and direct relationships with customers.
But it would not be alone in turning to a partner to improve AI
products. Microsoft and Apple, for example, have both struck
partnerships with OpenAI to use its ChatGPT to power some of their
products.
The release of the Remarkable Alexa, as it is known internally, is
expected in October, with a preview of the new service coming during
Amazon's annual devices and services event typically held in September,
the people said.
Amazon has not yet said, however, when it plans to hold its showcase
event, which will be the first major public appearance of its new
devices chief, Panos Panay, who was hired last year to replace long-time
executive David Limp.
The wide release in late 2022 of ChatGPT, which gives full-sentence
answers almost instantaneously to complicated queries, set off a frenzy
of investing and corporate maneuvering to develop better AI software for
a variety of functions, including image, video and voice services.
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Amazon's DOT Alexa device is shown inside a house in this picture
illustration taken October 1, 2021. REUTERS/Mike
Blake/Illustration/File Photo

By comparison, Amazon's decade-old Alexa appeared outmoded, Amazon
workers have told Reuters.
While Amazon has a mantra of "working backwards from the customer"
to come up with new services, some of the people said that within
the Alexa group, the emphasis since last year has instead been on
keeping up with competitors in the AI race.
Amazon workers also have expressed skepticism that customers would
be willing to pay $60 to $120 per year for a service that's free
today - on top of the $139 many already pay for their Prime
memberships.
ALEXA UPGRADES
As envisioned, the paid version of Alexa would carry on
conversations with a user that build on prior questions and answers,
the people with knowledge of the Alexa strategy said.
The upgraded Alexa is designed to allow users to seek shopping
advice such as which clothes to buy for a vacation and to aggregate
news stories, the people said. And it is meant to carry out more
complicated requests, such as ordering food or drafting emails all
from a single prompt.
Amazon hopes the new Alexa will also be a supercharged home
automation hub, remembering customer preferences so that, say,
morning alarms are set, or the television knows to record favorite
shows even when a user forgets to, they said.
The company's plans for Alexa, however, could be delayed or altered
if the technology fails to meet certain internal benchmarks, the
people said, without giving further details.
Bank of America analyst Justin Post estimated in June that there are
roughly 100 million active Alexa users and that about 10% of those
might opt for the paid version of Alexa. Assuming the low end of the
monthly price range, that would bring in at least $600 million in
annual sales.
Amazon says it has sold 500 million Alexa-enabled devices but does
not disclose how many active users there are.
Announcing a deal to invest $4 billion in Anthropic in September
last year, Amazon said its customers would gain early access to its
technology. Reuters could not determine if Amazon would have to pay
Anthropic additionally for the use of Claude in Alexa.

Amazon declined to discuss the details of its agreements with the
startup. Alphabet's Google has also invested at least $2 billion in
Anthropic.
The retailer, along with Google, is facing a formal probe from the
UK's antitrust regulator over the Anthropic deal and its impact on
competition. It announced an initial investigation in August and
said it has 40 working days to decide whether to move it to a more
heightened stage of scrutiny.
The Washington Post earlier reported the October time frame for
release of the new Alexa.
(Reporting by Greg Bensinger; Editing by Kenneth Li and David
Clarke)
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