Amazon Announces AI Features For Alexa: Will It Finally Turn Around Its Unprofitable Device Business?

On Wednesday, Amazon.com Inc (NASDAQ:AMZN) announced a revamped Alexa with artificial intelligence features. Will it finally help Amazon turn around its historically unprofitable devices segment?

What Happened: The Seattle-based company is rolling out an Alexa+ subscription, free for Amazon Prime subscribers, within the next few weeks. The subscription costs $19.99 per month for non-Prime members.

The service will first be available on physical Alexa devices starting with the Echo Show 8, 10, 15 and 21. According to CNBC, Alexa+ will eventually come to nearly all Alexa-supported devices shortly.

Amazon says that Alexa+ will have better conversational skills, personalized responses based on past discussions and better ability as a personal assistant. The company listed several examples of implementation of the new features in the announcement:

• Personalized advice for music based on a user’s preferences and favorite genre
• Integration with other Amazon devices such as Ring
• Analysis of user-uploaded documents

The company has faced backlash over its collection of user data on its website and through smart devices.

Why it Matters: Amazon has faced losses in its devices segment for several years. In 2024, The Wall Street Journal reported that the company lost over $25 billion between 2017 and 2021 on Amazon Echo, among other devices it sells. Amazon has marked down the devices in the past during holiday sales.

Adding conversational features to Alexa could help the company compete with rivals Alphabet, OpenAI and Meta.

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