Amazon Revamps Alexa—but Not Her Business Model
**Title: Amazon Revamps Alexa—but Not Her Business Model**
By Theo Wayt
Feb 26, 2025, 5:00pm PST
At a splashy media event in Manhattan today, I watched Amazon CEO Andy Jassy and other executives of the company unveil a long-awaited revamp of Alexa, meant to be a chattier, more helpful, and more personalized version of the voice assistant. They demonstrated how to use Alexa+, as the updated version is dubbed, to order groceries from Amazon Fresh, book a lunch reservation through OpenTable, and control smart home features.
If those functions sound familiar, it's because Alexa has been doing each of those things for many years. The difference is that the new version will be able to do so in a more seamless and conversational way that's familiar to users of large language model chatbots like OpenAI's ChatGPT, potentially increasing the likelihood that people will actually use those features. Amazon unveiled some impressive new Alexa+ functions too, such as sending reminder texts on a user's behalf and quizzing a student for a school assignment.
Initial reaction from the news media was positive. Alexa+ is likely to show up rival voice assistants, such as Apple's Siri. That's important. But the question Alexa really has to answer is how it can make money for Amazon. The new version will be free for Prime members, while others can pay $20 a month for Alexa+. As that's more than the $15 per month Amazon charges for Prime, it's unclear why anyone would make that choice.
We already know Amazon doesn't make money from the Alexa devices themselves, which it sells at a roughly break-even price. Amazon's hope seems to be that by adding to the Prime subscription's appeal, and by making buying things more convenient, Alexa+ should help it sell more stuff. It's a plausible strategy, assuming customers love the new Alexa. (It's also similar to Meta Platforms' bet that AI will help it sell more ads in the near term.) But Amazon for years has argued that Alexa drives more sales and supports other businesses like Prime, so the fundamental idea is not new. Will it work this time around?