Amazon is preparing to launch a revamped version of its Alexa voice assistant, powered primarily by artificial intelligence models from startup Anthropic, according to sources familiar with the matter.

The new "Remarkable" Alexa, slated for release in October, aims to offer more advanced conversational abilities and complex query handling.

The ecommerce giant plans to charge between $5 and $10 per month for this upgraded service, while continuing to offer the current "Classic" Alexa for free. This move comes as Amazon seeks to generate meaningful revenue from its voice assistant division, which has struggled to turn a profit despite widespread adoption.

Sources revealed that Amazon's initial attempts to develop the new Alexa using in-house AI software encountered difficulties, with the system reportedly taking up to seven seconds to respond to prompts. This led the company to turn to Anthropic's Claude AI models, which demonstrated superior performance.

An Amazon spokeswoman stated, "Amazon uses many different technologies to power Alexa. 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 Titan and future Amazon models, as well as those from partners - to build the best experience for customers."

The decision to rely on external AI technology marks a departure from Amazon's typical approach of developing capabilities in-house. However, it follows a trend seen with other tech giants like Microsoft and Apple, who have partnered with OpenAI to enhance their products with ChatGPT technology.

The new Alexa is expected to offer enhanced features such as multi-turn conversations, shopping advice, news aggregation, and more complex task handling. Amazon also hopes to position it as an advanced home automation hub, capable of learning and anticipating user preferences.

Bank of America analyst Justin Post estimates that if 10 per cent of Alexa's roughly 100 million active users opt for the paid version, it could generate at least $600 million in annual sales.

The revamp comes at a critical time for Amazon's Alexa division, with senior management emphasising the importance of demonstrating its revenue-generating potential in 2024. However, some Amazon employees have expressed scepticism about users' willingness to pay for a service that has been free, especially on top of existing Prime membership fees.

Amazon's partnership with Anthropic, which includes a $4 billion investment, is currently under scrutiny from the UK's antitrust regulator. The investigation aims to assess the deal's impact on competition in the AI market.

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