Editorial
The Gist
- Strategic AI partnerships. Amazon teams up with Anthropic, creator of Claude, to add advanced AI capabilities to Alexa, enhancing its market position.
- Reviving Alexa's appeal. With "Remarkable," a new AI-powered subscription tier, Amazon aims to reinvigorate interest in its decade-old Alexa device.
- Staying competitive. Amazon’s move follows similar AI integrations by competitors, positioning Alexa to compete more effectively in the smart assistant space.
Every tech giant is racing to embed AI in their most popular products. Like a high school prom, everyone is racing to find the right partner. Amazon may have found its “prom date” in a company in which it has invested – Anthropic, the creator of ChatGPT competitor Claude.
Reuters reports that Amazon will incorporate Claude in an expected new paid service tier of Alexa, reportedly called “Remarkable.” The partnership represents more than Amazon’s opportunity to position itself well in the race among AI providers. It shows how strategically valuable AI partnerships have become to maintain tech supremacy in delivering outstanding customer experiences.
The Details About Alexa 'Remarkable'
Alexa "Remarkable" is an upgraded subscription service meant to enhance Alexa’s capabilities with AI. It essentially would work as an assistant to a device that is a person’s assistant. While Alexa would answer initial questions like highlighting the weather, it would carry on conversations with an Alexa user, building on prior questions and answers.
This is similar to how AI assistants work now: they answer according to what they remember about your prompt, making them perfect for customer experience tasks that require iterations with updated data to get to a desired solution.
Amazon will charge a monthly subscription fee for accessing the AI-enhanced features. The key to Amazon’s success will be picking a subscription fee that feels like a small hit to consumers, yet allows it to grow margins and profitability on Alexa. Wall Street Journal reported that a “razor and blade” strategy involving losing money on the Alexa Echo speaker to lead to Alexa sales has not worked.
On top of pricing is the cost of AI development, which many businesses are discovering a high expense of developing and managing their own AI models. The cost of training vast amounts of data is expensive, with current providers of AI assistants quickly placing once-free features only with paid versions.
Related Article: How Anthropic's New Claude Upgrade, 3.5 Sonnet, Heats up the AI Race
Amazon’s History With Tech
At first blush, Amazon’s decision to pair with Claude seems like a cautious business acquiescing to the reality of AI development costs. By electing to use a large language model developed outside of its resources, Amazon may be missing the chance to renew and shift brand awareness toward being seen as an AI leader.
Amazon has been a tech powerhouse, relying on its own in-house data and software development for technological advancement. Amazon has used its tech to deliver on its brand promise of fast order delivery to customers. Many of its biggest rivals are just now attempting to recreate its success.
Amazon’s tech strategy has also lead to growing and maintaining strong developer audiences. The business value of the developer relationships is an ability to create additional products and services that enhance the customer experience of its main offerings like Alexa. Its retail competitors like Walmart have established their own analytics and operation prowess, while businesses from unrelated industries and markets, like Capital One, have been emulating Amazon in drawing developer audiences as they develop their own in-house technological capabilities.
To integrate its tech and operations to better deliver its brand promise, Amazon has launched consumer-oriented tech for its customers and partners. Many of its current devices are consumer-facing, complementing its operational services and attracting partnerships for product ecosystems around those devices.
Amazon’s current device offerings are split among on devices for consumer media, such as the Kindle table, Fire, and Fire TV Stick, and on home devices that complement its delivery and online commerce, such as Alexa, Alexa Echo and Ring.
What Does AI Do for Alexa’s Marketplace Position?
With so much invested, Amazon’s case for adding AI to Alexa is essential to continuing its brand promise. Amazon has long placed Alexa at the center of that promise.
Revitalizing Interest in Alexa
Amazon must be able to reinvigorate interest in Alexa, which is now a decade-old device in the market. Both Amazon Alexa and its main competitor, Apple’s assistant Siri, have seen declining marketplace excitement over that time.
Alexa, like Amazon’s other devices, arrived during the Internet of Things era, so adding AI-powered services would strengthen customer experiences and elevate the brand promise for a seamless customer experience.
Challenges and Competitor Moves
The world will have to see if the decision to add Claude to Alexa is indeed the right direction for Amazon. Amazon may simply have had no choice but to partner to gain a consumer-oriented large language model. Apple added a ChatGPT integration to Siri, along with the promise of Apple Intelligence, Apple’s suite of AI-based features.
To top off the situation, Reuters noted some reports indicating that Amazon has had difficulty in developing its own large language model for a consumer application like Alexa. Amazon does have its own language model application in Amazon Q – I reported on Amazon Q’s launch and its implications.
But its integration into Visual Studio Code and other IDEs signals that Amazon Q is aimed solely at developer audiences, at least in the meanwhile. In comparison, Apple announced Apple Intelligence alongside its ChatGPT agreement, so it has a means to brand its AI capability with its devices while still leveraging a hot and highly-watched AI product.
Still, Amazon has established partnerships in other products to expand Alexa discovery and usage, such as car brands that offer Alexa access: Drivers can give hands-free instructions to Alexa and Alexa-based devices from their car. More brands are including Alexa as a luxury feature, so moves like this are meant to help customers see Alexa in a new light.
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Preparing for Alexa Remarkable and Market Reactions
The race to add AI and build a valuable use case is intensifying by the day, let alone every quarter. Amazon will prove its readiness when it previews Alexa Remarkable. The preview is expected during Amazon's annual fall devices and services event.
After the details are revealed, marketers with strong associations with Amazon services should evaluate what those changes may mean for their most important dance partner – their customers. You can bet Amazon has done so for theirs.
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