- 6 weeks ago
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00:00Panos, the way that I look at this is that this is the first generation of Amazon hardware that has your fingers on it, right?
00:07And as a place to start, could we talk a bit about the hardware innovation, the areas that you feel are most important here in this generation?
00:19Yeah, I think this is a, first, it's an incredible team that's building these products.
00:23And these products are designed from the silicon up, quite literally, this is custom silicon built for the Alexa products.
00:31But there's also a focus right now on the sensing capabilities from the camera to the microphones to just presence detection through Wi-Fi.
00:39It's really important because you can start enabling these proactive scenarios.
00:43The other thing is great sound.
00:45Like, Ed, it's so important for our customers.
00:47Like, just filling your house with sound.
00:49And I think sometimes we forget the emotion of music or how clear you want to have that conversation back and forth.
00:54So each one of these details is kind of thought through.
00:57These products are built from the ground up.
00:58But this team has just literally pushed through every detail.
01:02I think about this at a time where we are in a voice assistant or voice-based generative AI era, right?
01:11As you know, I have an Alexa device in almost every single room of my house.
01:15But when I think about the Gen AI tools that I'm using.
01:17Yeah, which is cool, by the way.
01:18Right, it is.
01:19But here's the thing.
01:21The Gen AI tools that I'm using every single day, I go to my smartphone because it's on my person.
01:27There isn't something that the Alexa device can do with the same immediacy.
01:32Maybe you disagree that my thumbs can do.
01:35So what is it about this generation of hardware that makes those form factors, the Echo devices and the range of other things, the right form factor for this era?
01:46It's a good question.
01:49It's a good question.
01:49First, the new Alexa, Alexa Plus is powered by AI.
01:55So it's LLM-backed, if you will.
01:57So limitless knowledge, limitless understanding.
01:59You can have any conversation.
02:00It's quite conversational.
02:01So when you talk about what you're typing into a phone, one of the things I like talking about is maybe even a little easier now, Ed, because you have all that kind of infra, you literally can just speak.
02:12We, as a team, call it Ambient AI, and we believe that your Echo devices right now, as you light them up with Alexa Plus, just have any conversation at any time.
02:20I think there's something quite powerful about that, too, where a lot of times we take out our phone, we get distracted.
02:25I'm at the dinner table with my kids.
02:27We have this idea that we want to keep our phones down, right, because we want to be present with each other.
02:32And there's so many times where you pull out your phone to answer a question, almost like you just said.
02:36But now it's just changed.
02:38It's completely different.
02:39Just say Alexa.
02:40Have the conversation.
02:42It's quite literally all the information there.
02:45And it's conversational.
02:46Not only that, she can then get the next thing done for you.
02:48Let's say you have a conversation.
02:49You want to talk a little bit more about what's happening and what do we think about what's happening tomorrow.
02:54You just add it to your calendar right there and then just with your voice.
02:57It's distraction-free.
02:58It's ambient.
02:59And it's so fun because you're just engaged in a totally different way with your voice, just as you said.
03:04Alexa Plus is listening more contextually.
03:08It is listening more intelligently.
03:11Yeah.
03:11How do you build trust with the customer and consumer base knowing its capabilities?
03:19We've been doing it for 10 plus years.
03:22This is what we are 100% focused on for our customers.
03:25At the end of the day, the way you do that is you give your customers full control.
03:29Full control.
03:30Opt in.
03:31Opt out.
03:32Remember what you want.
03:32Do just literally control your data for yourself.
03:37Plus, everything to Amazon is anonymized.
03:39So, we don't really have any info.
03:41So, at the end of the day, it's up to you and what you do with your product.
03:44And I think that's what the answer is.
03:45You give customer full control.
03:48And we do.
03:49We're very proud of that.
03:50Like, that's a big deal for us.
03:52Panos, is there like a generational divide in the Alexa user base?
03:57And how does this generation of hardware change that?
04:00In other words, is there just a group of people in society that are going to come to AI-enabled devices for the first time here?
04:08And if so, for what reason?
04:12We do think so.
04:13We do think so.
04:15A couple of reasons.
04:16One, you know, these are objects and, you know, they're beautiful.
04:19This matters.
04:20Like, when you buy something, it's something you covet, something you wanted and you go after.
04:24Because it's so useful and it can get so much done for you and it has that depth of knowledge, we do think there's a whole new customer base coming in for Alexa to go use Alexa Plus.
04:34That's why these products were designed.
04:36And maybe to your first question, like, thought all the way through, including how it fits in your home or how it fits in your apartment, where it just seamlessly fits in.
04:45And then with the beautiful sound that comes off of it, that elegance of just contextual understanding, combine those things.
04:50And you end up with a whole new category of device for people, which then leads you to a whole new customer set.
04:56I'm pretty pumped about it.
04:58Panos, Bloomberg's Mark Gurman has written, and it's based in part on a conversation with you, that Amazon's overhauling its devices to take on Apple in this AI era.
05:11Do you agree with that?
05:14I haven't seen it.
05:16Can I say that?
05:17Let me read that article.
05:19Here's what I'd say.
05:20We build our products for our customers and for people.
05:24My whole goal is quite simple.
05:26We want AI to be useful for people.
05:29End of story.
05:30And, like, I think we're building devices to do just that.
05:33And I do believe they're beautiful.
05:34I think they fit in the home.
05:36I think they're so well thought through that when people use these devices, Ed, they're going to love them.
05:40They're just going to love them.
05:42I can't, like, this is something I just want people to get their hands on them.
05:45The way that we could look at this bigger picture is that the Echo family, at least, has always had an element of affordability.
05:53And I know that you also want to look broader at premium products, too.
05:57So how do you balance the signature premium while keeping that sort of historic affordability of what Echo has represented to date?
06:05You essentially build products for every customer.
06:12That's how you do it.
06:13Like, we have products that start at $49 and can go up to $4.99.
06:17And, you know, you can think about price point, but then you also think about feature set.
06:21We want everybody to have that great experience, but they can do it at the price point that suits them best.
06:27And, you know, at that point, when you're able to kind of encompass, then, you know, you have something for everybody.
06:34That's really a big deal for us.
06:36And we'll continue to build not only affordable products but also beautiful products.
06:40In essence, we wrap that in a package and we just say we just need to make great products for people.
06:44So, Panos, how many people are paying actively for Alexa Plus and how many of them are using it just through their prime platform subscription or entitlement?
07:00We're not quite there yet, Ed.
07:01We're still in early access.
07:03So, in early access, nobody right now is actually paying.
07:06They're just using it.
07:07We're getting the feedback.
07:09We're seeing incredible engagement.
07:10You know, we have over 10 million people have access to it right now.
07:15It's pretty awesome, though, to see how they're using it.
07:18But right now, because it's in early access, we're not charging.
07:22I go back to the root of my question, which is on the hardware innovation, right?
07:26The choice that a consumer will have is the need to pay $20 a month for Alexa Plus.
07:32They might have older generations of now obsolete Amazon hardware.
07:37Is upgrading to this new generation absolutely necessary to access all that Alexa Plus has to offer?
07:47Absolutely not.
07:48You can – like, we designed the product to work back to products all the way back to 2016.
07:52And so, that is, like, a 99 or so percent of our customer base right now.
07:57Ed, this was a really important point.
07:59If we're going to have ambient AI where people can just talk to Alexa Plus anywhere, it wasn't about just replacing products.
08:05That said, the new hardware is awesome.
08:07And we really do want people to experience the next generation of it.
08:10These products are faster.
08:12They fit seamlessly into your home.
08:13The sound is amazing.
08:14The microphone is amazing.
08:15The sensing is amazing.
08:17And so, to really get the best experience, for sure, the new hardware leads you there.
08:22And that's what today was all about.
08:23But I also want to tell you, like, this is all about customers and doing everything we can for them.
08:27And part of that is making sure that they have access to Alexa Plus in their homes right now if they choose to.
08:32If it's about the customers, now that you've had some time in this role, and I know you think so deeply about everything from supply chain through to the product itself, the in-house work on silicon.
08:44We've been over that.
08:46But is there a pressure to make this device's business as a division profitable, or is it not necessary if there is some bigger picture goal here?
08:57Yeah, no, it is about – well, first, there's a lot of different device businesses, so you know.
09:03But also, it is about making, you know, creating the next big business for Amazon.
09:07And, you know, we see that growth, and we're pretty excited about it.
09:10Panos, there was actually a really large range of things, right?
09:12I think you're alluding to Ring as being one of the offerings today, right, across the broad range of hardware domains that you're in.
09:22Yeah, it's an awesome product line.
09:22You know, if there is one single device that is most important that you've gone through today, which is it, please?
09:32You can't.
09:34Please.
09:34Well, and it's like asking me what – it's like asking who my favorite child is, and I have four of them.
09:41I made that mistake once, quite literally.
09:44And I have to tell you, like, I mean, these products are all pretty amazing.
09:48I think the Ring product family is stunning right now in 4K.
09:52Kindle is a product that I'm in love with every day and use every day alongside Ring.
09:56And then the Echo devices are also lighting things up.
09:59Fire TV is used by hundreds of millions of people.
10:01So, picking is a little bit tricky for me.
10:04It's like picking my favorite is something I don't – I definitely don't want the team to say.
10:09So, I'm going to say, like, I think I'm going to treat them and hold them all up equally as most – as important.
10:14And really, it does come down to how they all connect together.
10:16So, that really does.
10:18As you've explained, Panos, it is a broad offering with lots of different subcategories.
10:23And I appreciate you taking the time and going so deep on it with me.
10:26Panos Panay, the Devices Chief at Amazon, really grateful for your time.
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