Internally referred to as “Remarkable,” the new technology will be powered by Anthropic’s Claude AI models. Sources close to the matter have indicated that this shift occurred due to the underperformance of Amazon’s in-house software.

The enhanced Alexa will operate using advanced generative AI to handle more complex queries. Amazon plans to offer the new Alexa as a subscription service, priced between $5 and $10 per month, while the classic version of Alexa will remain free. This approach marks a significant change for Amazon and suggests that the company aims to turn this voice assistant into a profitable venture after years of limited success in generating revenue through this platform.

Amazon’s decision to quickly adopt an external model, Claude, indicates a strategic shift. Amazon typically prefers to build everything in-house to minimise its dependence on third-party vendors, thereby avoiding external influences on customer behaviour and business strategies, as well as external influences on who controls data. However, it seems that Amazon’s traditional strategy does not provide the massive AI capability needed, or perhaps Amazon has realised the need for more powerful AI. It is also worth noting that the involved AI developer, OpenAI, is affiliated with major technology companies like Apple and Microsoft in developing AI technologies.

The launch of the “Remarkable” Alexa is anticipated during Amazon’s annual devices and services event in September, though the company has not confirmed the exact date. This event will also mark the first public appearance of Panos Panay, the new head of Amazon’s devices division, who has taken over from long-time executive David Limp.

The updated version of Alexa would be a more interactive and intuitive assistant, as the new functionality would stem from its conversational mode. The assistant is envisioned to do more than just recognise patterns in people’s speech; it would be able to hold conversations built on previous interactions. The most likely features include personalised shopping advice, news aggregation, and more advanced home automation. As for whether customers would pay for Alexa, this likely depends on the final set of available features. The issue might be particularly pressing for Amazon, given that customers already pay for Prime membership.

The future for Alexa is quite ambitious, but it also bears significant risks. For the new version to be successful, internal performance benchmarks must be met. While estimates for “Remarkable” Alexa suggest that even a small percentage of current users paying for the premium version could become a substantial income stream for Amazon, the likelihood of achieving the expected outcomes remains uncertain.

However, Amazon’s partnership with Anthropic is currently under regulatory review, largely due to an investigation by the UK’s antitrust regulator. The impending upgrade announcement and the regulator’s response could significantly influence the company’s future activities.

Amazon’s initiative to adopt an AI solution developed by Anthropic marks a significant shift for the company, which previously focused on developing its proprietary technology. At this point, it is possible to view this move as part of the general trend in the industry to turn to partnerships regarding AI development to enhance the competitiveness of products.

See also: Amazon strives to outpace Nvidia with cheaper, faster AI chips

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Silicon Valley darling Nuance is one of the world’s most recognisable AI companies for the creation of Siri, the voice assistant that would later go on to become Apple’s first-party solution.

Nuance now focuses its efforts predominantly on enterprise communications, particularly in the healthcare space which has seen increased interest amid the COVID-19 pandemic. Using technology from Nuance, medical staff can reduce their reliance on pen-and-paper and free up more time for improving patient outcomes.

Bloomberg initially reported Microsoft’s interest in Nuance.

Anurag Rana, Senior Analyst at Bloomberg Intelligence, commented in the report: “This can really help Microsoft accelerate the digitisation of the healthcare industry, which has lagged other sectors such as retail and banking.

“The biggest near-term benefit that I can see is in the area of telehealth, where Nuance transcription product is currently being used with Microsoft Teams.”

Nuance’s shares [NUAN] closed yesterday at $45.58 but Microsoft is reportedly prepared to pay $56 per share – over 20 percent higher. Nuance’s shares have increased pre-market to $54.90 per share, seemingly boosted by the rumours.

Microsoft has all but killed off its Cortana voice assistant for consumer-facing purposes, removing it from the App Store and Play Store earlier this month. Redmond now appears to be pivoting its efforts towards developing AI solutions for specific enterprise areas.

In addition to Nuance’s AI expertise, Microsoft would also be gaining access to the company’s over 3,500 patents.

If the deal goes ahead, it would represent Microsoft’s largest acquisition after its $24 billion takeover of Linkedin. Microsoft is also reportedly in talks to acquire gaming communications platform Discord for over $10 billion. This could be a very big news month for Redmond.

Update: Well, we did say the deal was expected to be announced imminently. Mere hours after this article went live Microsoft confirmed its acquisition of Nuance in an all-cash transaction valued at $19.7 billion.

“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” said Satya Nadella, CEO, Microsoft. “AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance.”

“Over the past three years, Nuance has streamlined its portfolio to focus on the healthcare and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions,” said Mark Benjamin, CEO, Nuance. “To seize this opportunity, we need the right platform to bring focus and global scale to our customers and partners to enable more personal, affordable and effective connections to people and care. The path forward is clearly with Microsoft —  who brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference. At the same time, this combination offers a critical opportunity to deliver meaningful and certain value to our shareholders who have driven and supported us on this journey.”

“Nuance not only brings an attractive set of healthcare customers in AI – a huge bid for Microsoft – but also deep domain expertise as well. This has been the missing ingredient for Microsoft until now,” comments Nicholas McQuire, Chief of Enterprise Research at CCS Insight.

“In the past, we have seen firms like IBM buy industry specialism in datasets but Nuance delivers Microsoft a more mature set of AI solutions in areas such as speech recognition, document processing, fraud detection, and image recognition. Ultimately these will prove key to differentiating Azure to healthcare customers against its largely horizontal competitors.”

(Image Credit: Apple)

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Duplex, for a quick primer, is Google’s AI-powered voice bot which can call businesses on a person’s behalf for things such as booking hair appointments. It’s so realistic that everyone has decided that bots must declare themselves as such before chatting with a human.

A company known as PolyAI – which specialises in “enterprise-ready voice assistants” – has posted an account of what happened when Duplex called one of its restaurant assistants.

Duplex was calling businesses over the summer to update opening hours on Google Maps. This is how the conversation went:

Nikola Mrkšić, Co-Founder and CEO of PolyAI, wrote in a blog post:

“As far as we’re aware, this is the first naturally-occurring conversation between AI voice assistants in the wild.

I have never seen anything like this before, and I’m incredibly proud that PolyAI is sharing this moment in computing history with our friends from Google.”

Mrkšić humbly admits that Duplex sounds far more human-like than PolyAI’s assistant. However, he also makes a valid reference to the “uncanny valley” theory.

The uncanny valley theory suggests that people are more positive towards something which sounds like a human, up until a point. When it sounds too much like a human then it becomes creepy—a sentiment which many have certainly shared about Duplex.

(Photo by Jeffery Ho on Unsplash)

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The post What happens when Google’s chatty bot chats with a chatbot? appeared first on AI News.