Amazon (AMZN) is changing how it approaches Alexa by moving beyond cheap smart speakers to introduce premium (and pricier) AI-powered devices. Devices chief Panos Panay, who previously led Microsoft’s Surface division, is pushing for better hardware with stronger AI capabilities. The goal is to make Alexa more useful than just setting timers or answering trivia questions.
Panay is focused on quality, promising improved sound, longer battery life, and better security across all price tiers. “I want perfection in every single product that we ship — period,” he told Bloomberg News. However, details on specific features remain scarce.
Alexa+ Aims for Smarter and Faster Responses
A key part of the upgrade is Alexa+, an AI-driven system that will process more tasks on-device rather than relying on cloud servers. This should improve response time and privacy, similar to Apple’s approach. “We’re envisioning what’s the next thing for a customer when it comes to AI devices,” Panay said.
Amazon is bundling Alexa+ with its $139 annual Prime membership, hoping to boost adoption. But with rivals like ChatGPT offering advanced AI assistants, Amazon has a tough battle ahead. The company is promising an “IQ bump” for all Alexa-enabled devices, even older ones, but it’s unclear if that will be enough.
Amazon Drops Unpopular Alexa Gadgets
Amazon is moving away from its past habit of stuffing Alexa into every kind of gadget. Smart microwaves and Alexa-powered rings didn’t take off, so Panay is being more selective. Augmented reality glasses and new wearable devices are in development, and there’s even a chance the home robot Astro could make a comeback. “If a robot is part of that, then I’ll make sure we have a great robot,” he said.
One thing Panay is not eager to revisit is the smartphone business. Amazon’s Fire phone flopped a decade ago, and while he hasn’t ruled out trying again, he’s not in a rush. “It would be foolish of me to not step back and look at how the world’s changing in front of us,” he said.
Challenges Could Slow Amazon’s AI Plans
Amazon’s hardware division is under financial pressure, with budget cuts and layoffs affecting the team. CEO Andy Jassy has already scrapped several projects, including a fitness tracker and a kids’ video chat device. Panay’s vision for Alexa faces obstacles, and execution won’t be easy.
The first wave of new Alexa devices will launch this fall, but it may take time for the full transformation to take shape. Panay insists Amazon is in it for the long haul. “The patience and investment are unmatched,” he said.
How This Could Impact Amazon’s Stock
For investors, the shift to premium Alexa devices presents both opportunity and risk. If Amazon successfully drives demand for its higher-end AI-powered gadgets, it could boost revenue and strengthen its Prime ecosystem.
However, if consumers aren’t willing to pay more for Alexa+, the company risks sinking money into a struggling hardware division with little return.
Given that Amazon’s hardware segment has never been a major profit driver, investors should monitor whether this gamble pays off or becomes another expensive misstep.
Is Amazon a Buy or Sell Right Now?
Analysts remain bullish about AMZN stock, with a Strong Buy consensus rating based on 46 Buys and one Hold. Over the past year, AMZN has increased by more than 5%, and the average AMZN price target of $270.33 implies an upside potential of 41.33% from current levels.
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