I was trying to think of something interesting to say, but I got distracted because The Tech Download is now on video on Apple Podcasts. So, check it out. That could be the cold open.
I'm Arjun Kharpal, senior technology correspondent at CNBC and host of The Tech Download — welcome to another episode. Now, if you're like me, someone who loves gadgets, loves consumer electronics, then this is going to be a very exciting episode because I'm very excited about what's coming next from all these different companies creating new devices in the world of AI.
The tech companies are all trying to figure out what AI exactly means to the future of their electronics. What does it mean when we start using these digital assistants, or agents, as they like to call them? Now, we just did an episode, a couple episodes back, with Cristiano Amon, the CEO of Qualcomm, and he was talking about how these AI agents may change the way we interact with phones, and they might lead to new types of consumer devices.
Now, when I say agents, we're talking here a big jargony buzzword that the tech companies are using, and really it means these more and more advanced digital assistants that can do more and more complex tasks on our behalf eventually as well. And in this episode, we're going to get into what Amazon in particular is doing around agents, and around AI devices as well.
Easy to forget Amazon of course is massive in e-commerce, it's a huge cloud computing player as well. It's easy to forget they're actually a major device player. It was in 2014 that they brought out the Amazon Echo. Do you remember this, the speaker with Alexa built in? This is their digital assistant as well. You could talk to it, ask the weather, etc., etc. And since then, Amazon's brought out so many more devices. You think about the Ring doorbells, for example, and lots of other connected devices as well.
But it's really Alexa that is at the heart of Amazon's consumer strategy here. They recently launched Alexa+, which is the next generation of this voice assistant. It's more contextually aware. It can handle these longer queries. And the question is, how does this all fit together with the broader Amazon strategy here? That's a conversation I have had with Panos Panay who's Amazon's Senior Vice President of devices and services on this episode of The Tech Download.
So, Panos, thanks so much for joining me on The Tech Download, I appreciate you taking the time.
Hi, great to be here. I'm so happy. It's good to see you. It's been years, Arjun.
Yeah, it's been a long time. We last spoke in 2017, which is a long time ago. And lots of things have changed, you were at Microsoft back then, now you're at Amazon. And I want to kick this conversation off by just kind of setting the scene, because it's all about AI hardware and how our relationship with our electronics and our devices are going to be changing as AI gets more advanced, and as AI proliferates all these areas of our lives. So, when we say AI devices, AI hardware, what does that mean to you?
You can argue we've kind of been building AI devices for the last 10 to 11 years. Arguably saying we invented AI devices back then with Alexa coming into market. It's quite a powerful product if you remember its launch, incredible. Now you see, it really is about the home. Think about Ring, what Ring can do for you, what Alexa does for you in the home, the Echo devices do for you, Fire TV, and the way these all connect right now using Alexa+ is pretty magical. And you know we're kind of seeing the engagement from customers in new ways just engaging their assistant through and through in the home, which is quite powerful relatively speaking, but maybe a little bit different than the way other people are talking about AI right now.
Yeah, I remember when the first Echo device launched actually, I think I was at the launch here in London actually when it first came to Europe. It was mind-blowing.
Yeah, and it's so interesting because it was something new at the time in the way that we were interacting with voice in the home and when you think about then to now, what are some of the biggest tech shifts that have happened that are allowing these devices to become more and more AI infused?
Yeah, I think I mean the patterns are changing altogether, like think of it, what it was before was kind of like a point and shoot, like I have a question, I get an answer and I had to be very specific about my questions, but incredibly smart, 10 years ago, when you think about it. But that transformation is massive, it's massive right now. You know, you have LLMs powering this thing in the background, the entire engine of Alexa has changed and now you're just seeing magical experiences come off of it.
Customers are engaging it twice as much, and it's getting down into deeper conversations, you're able to get to smarter ways of shopping, you're creating routines in your home, but the tech transformation is ultimately, you know, you have AI agents in the background that are doing work for you, at the end of the day. But you don't have to think about it, which I think is the most important thing. A lot of times in the past, you had to have kind of what we would say Alexa speak. You'd have to use the exact right words to get the answer you were looking for or you know, had to be quite precise. And now it's more contextual. You just say what you're thinking, and your assistant is there to help you through the day and help you do what you want to do. It's been fun to see people use it and it's kind of mysterious how people take it and do what they think they need to do with it. It's been pretty fun to watch.
So, Alexa+ really is at the heart of this push at Amazon around AI devices. What have been some of the biggest changes from, you know, what you had previously to now Alexa+ that, you know, you're most excited about and that you think are going to have, you know, a substantial impact on the way we're interacting with these devices?
One of the things that we're seeing is the more you use her, the better the product becomes. Because what's happening now with Alexa is she understands you, she holds memory, and the more you can engage, the more patterns it understands and learns about you in your life. So now you're in a place where you know depending on what you're watching, what you're listening to, even what you're eating, cooking, think of it this way, the more your assistant understands you, or even your partner or friend, the more they understand you over time, you know, the better that relationship becomes. And that's what's happening right now with Alexa+, it's quite empowering.
So, you now find sense where Alexa is starting to find ways to suggest routines for you that you might do when you wake up in the morning, suggest the next movie you might want to watch. We're watching music engagement, it's incredible. Arjun, it's like you have your own DJ. Just set the mood for me, Alexa, and she kind of knows what you want. But this is all about deep understanding, and the more you're using the product, the more powerful it's becoming for you. We like to think we're reinventing AI hardware in the home, right now.
When we launched Alexa+, we watch the engagement increase, but with a great product. A lot of times the pattern you want to see is, there's always engagement when somebody starts using their product for the first time. You've been in this industry a long time, and I've seen this, I've seen it where the product spikes and engagement's up and you know, never celebrate too soon, my gosh, never. Ever. And you know you can get excited, but really what it comes down to is about 45, 60 days later. What's the engagement look like? Are people still using it? Like are they wrapped? Do they love it? And the way you know that is intensity of usage.
And so the more patterns we watch on Alexa+, that's what's happening. Somewhere around 45, 60 days intensity is going up and basically, it's because it's getting to know you. This is the transformation of the product at the end of the day. It's also got no blockers, it can answer every question, there's no dead ends, you can set up routines, and then as that engagement goes up, we start watching how it's going up, and it's connecting other devices like Ring. Like if you have cameras around your house right now, something you can never do before, but now just turn to your Echo device and just ask Alexa, 'Hey, what happened around my house today?' It's pretty magical. It's pretty magical to get that answer. How many packages were delivered today? It's pretty cool. And this is just your assistant working for you in the background, you know, and it is the power of AI, it's the power of the LLM that's powering it. But ultimately, these sort of examples are starting to crop up everywhere. But it really comes down to the usage patterns and how much they've been increasing.
So, how would you describe the value with Alexa? Because you know we can look at a company like Google for example and their sort of operation is around putting Gemini across all of its services, whether it's Gmail or Chrome and the Gemini app etc. So, what is the approach in terms of you know building that ecosystem at Amazon with Alexa.
There's a couple of ways to define value, but I like doing it from a customer standpoint. I just want to make their lives easier. That's it. So that's the overarching principle. It's very simple. First off, AI can be intimidating, I know maybe not for your audience, but like when you think about just the you know take Gen Pop, it's intimidating, like what do I do, how do I set it up, what does it mean, what do I do next, what is an agent, what do I have to open my PC, and you know coming from the PC world, I get all that. But at the end of the day, the way we measure it literally is, are we making our customers' lives easier here at Amazon.
And we have this huge customer obsession and focus, no doubt. Alexa's one of these things, like did I make shopping easier for you? Did I make listening to music easier for you? Are you setting your calendar? Am I helping your routines moving forward in the home? When you wake up in the morning, is your daily briefing meaningful to you? And all this isn't like, I have to set up my AI, you know, I have to do it. I have to do it, somebody teach me? It's not. You just wake up and speak. You know, it's so natural and intuitive. And I think that's where our value comes from. At the end of the day, our customers right now, first off, c-sat on Alexa+ is awesome, like it's higher than it's ever been, customer satisfaction. But I think it comes down to there are just parts of life that get easier, and I think that overlay of AI in general, like that's what it has to do. It has to move from this complicated state, for many, to just what is the simplest thing and how does it make our customer's lives easier.
The future roadmap for Alexa+, the industry is talking about this word agentic, right, and saying well eventually we're going to get to a state where these AI systems are going to be able to autonomously carry out things, they're going to be like the best personal assistant we've ever had, and that's the promise right now around the technology. What's the road map for Alexa+ to become this level of agent that so many in the industry are talking about?
Yeah, I think for that to be true, your assistant in that sense, has to know you. I think we're kind of living the road map, right now. You know, the more you use Alexa+ today, the better off it becomes just understanding you. And over time, what happens with Alexa is she learns your patterns, she starts being proactive, and instead of you asking, maybe she raises her hand. She offers your calendar, she understands maybe you need a nap, she checked your health indexes. She's fundamentally saying maybe you're tired. She can schedule the workout for you. This is all without you asking. I think in that world of the proactivity, I think that can be very real, but you have to do it in a way where your customer wants it.
And so, here's the beauty, there's the, I don't want any help, I don't want any proactivity, I just, when I need you, I'll ask for you. And then there's other customers who right now are saying, do it all, do it all. And I think there's a scale here, Arjun. You've got to be careful. This is not a one-size-fits-all. And we have hundreds of millions of customers, we see it every day. There are just some people who just wanted simple, basic, black and white, simple communication and nothing more. And there are customers who are basically saying do it for me, get it done. And I think that world is coming, I think it's already happening. But right now, in the home, you know, it's kind of simple like people kind of, it gets magical. You connect your Fire TV, you connect your Ring camera, you maybe have an Eero router, sure, but ultimately you plug in an Echo device and everything starts to come together for you.
And when that happens, without setup, without having to program or ask an agent how to do something, and it just starts to infer, I think that's where it starts to transform, you know. I'll set your alarm tomorrow at 6:30 a.m., I'll slowly turn up the lights, and I'll play some beautiful music and let's get you up and started the right way. That's kind of the assistant that you want.
How do you balance that aspect of memory you were talking about with, you know, privacy? And this is going to be top of mind for I think many consumers when there's more and more devices in the home and, you know, AI learns more about us. How are you approaching that kind of balance there?
Yeah, it starts with trust, like it's the first thing. You know it doesn't matter what tools I hand you right now, or tell you where encryption is, and give you the technology side of it, it starts with trust. You trust the product you're using. Do you trust you know ultimately the product makers, the company? I think that matters. But here's how you get trust. You have to build security in from the beginning. We've been doing this for 10 years. You have to give customers choice, second thing. You have to give them choice. Do you want the microphones open? When do you want your cameras? How much information do you want to share? How much do you not want to share? The customer has to have that choice.
And then with memory, to your question, as you accumulate memory, again you go back to the customer and you make it very simple. Do you want me to remember that? Yes or no? That's what the assistant will ask. And the answer is yes, no. That's it. Then it expunges, it's gone, it's deleted, or you go to a dashboard and you delete it, but if you don't give the customer choice and empower them, I think that's when you start losing trust. So full circle, you have to be able to do, you have to be able to collect those memories because a lot of times customers, they don't want to know how the technology is working, they just want to know what the outcome's going to be. Now again, we'll change it for your audience, versus for others, like gen pop, they don't always want to know how it's working. They want the outcome. They want their life to be easier. So, to do that, it's as simple as, do I trust this or do I not?
You know, I liken it to be, we have a product right now called Bee. I don't know if you're aware of Bee, but it's a cool product. This is a kind of futuristic AI device where it sits on your wrist, you listen, it listens to what you're saying, and you know, you choose, do you want it to listen now or do you not? And at the end of the day, that information is just for you, and it's fully encrypted, nobody else has that data, it's just yours and you just say, 'Hey, how did my day go?' You take a look. How did I behave? How did I act? What did I miss? What are my notes? What are the action items coming out of the day? And you know, if you want to share that with Alexa, you can. And now all of a sudden, you have a proactive assistant that goes, 'Got it, there's five action items, I'm going to catch them for you.' But ultimately, none of it matters unless your customer trusts you. And that's what it really comes down to.
Well, Panos, I'm glad you mentioned Bee because you know, the next part of the conversation I want to talk to you about is how you're thinking about devices beyond the home, because you know a lot of what we focus on so far is around that home environment, whether it's the Echo devices or the Ring. But on a previous episode of this podcast, I was speaking to the Qualcomm CEO, Cristiano Amon, and he was saying, 'Look, we've got dozens of designs of various different things...'
Cristiano's got so much energy, man. So much energy. When I get 30 minutes with Cristiano, I walk out of that room going, 'Oh my god, I'm behind. Oh my.' He's amazing. He's amazing. Yeah.
Yeah, and he gave that vision, that energy and he was saying, look, we've got all these designs in the works, and he was sort of mentioning some of the types of devices he was saying, pins and pendants, and various other things. He's very excited about smart glasses. So, I want to ask you about a few of these product categories. As you look at the Amazon roadmap for product, first things first the smartphone. There's been so much discussion about whether Amazon returns to this market, and we know the smartphone is amongst some of the most personal devices, we use it all the time, and it's a great access point for apps right, including various AI apps that are out there as well. Is this a market you've spent recently much time on, thinking about a return, or how you might come back to this kind of more mobile experience.
No. No, I think, like right now we're not thinking about building a smartphone, I get asked the question all the time. It'd be irresponsible for me not to be looking at the market and assessing what's changing, how do we think about it, is it a market we should enter, and we do that for sure, but ultimately that's not on the docket today.
That said, I think it's important to note when you think about the future of AI devices, you've got to be super skeptical right now for anyone who tells you they know what they are. I have a lab full of devices. We have a team, incredible team, when I say I, ultimately a team that's looking at what are, what is the future of devices? How do they all connect? How does Alexa run through all these devices? If you need your assistant to know more about you, and that's part of the premise we talked about, then of course you need devices with you when you're on the go, in the car, you know moving out and about, understanding your surroundings, where you've been and so forth.
I think that's all true, but you've got to be a little bit skeptical right now when somebody says we know what the future form factor is. I actually don't, not sure there's a single one. I think there's some cool stuff being invented right now and in the lab. I think we might be moving away from a world of apps and screens. I think that's true. It doesn't mean we're moving away from it for everything, but like the primary functions of what you get on a PC and a phone are critical. I don't think they're changing, but the evolution I think goes way beyond it.
We're moving to, and now just translate this to devices, you know you have to imagine for me because I can't sit here and say here's what the next three devices we're going to launch are, but we're moving from kind of screens and apps to what I would say is conversation and context. Context of where you are, awareness of who you are, awareness of what's happening around you, the context, the information you've been giving your assistant, your agent, whatever you want to call it.
And that's different than, you know, I lose myself for 10 minutes looking at a screen right now, getting as much information as I can to be informed. And I think that transition is happening. It's happening right now. I think the technology is enabling it. But I don't think it means in any way that the phone isn't important, that a screen and an app isn't important. I just think there's so much more to be done for us, especially when it comes to proactivity and assuming what the next best thing for you is, I don't think that comes from an app on a phone. I just don't.
So, this is where, you know, voice interaction becomes more important going forward.
Yeah, critical. And that's trickier than people kind of let on, especially in the home, when you're 10 ft away, 20 ft away, who's speaking, how much noise is in the background, what information are you trying to get, give so forth? The phone's in the pocket. I don't really need to pull it out right now. I want to stay in the moment. All voice. Is it only voice? Absolutely not. You can't get stuck on that either. I think interaction models, you're just, the modalities are changing, Arjun, but they're changing in a more natural and fluid way just like you move every day in your life. It's like riding a bike, driving a car, it's all pretty natural. I think voice just becomes another one of those inputs and when it's time to speak, it's just a lot easier context wise.
I just want to spend some time unpacking a little bit of this conversation so far because you heard Panos use the word ambient there when he talks around Alexa and some of the other AI technology that Amazon has on offer. And really the idea is that they want Alexa to sort of be pervasive, everywhere, across many different touch points with the consumer. Amazon's not betting on a single gadget to sort of win out this category. It's thinking more broadly around the connected home, around the doorbell, around Alexa-powered devices across the home, and across I guess a user's entire digital life as well. And that's really the strategy here.
Part of this is touching towards this idea of a post-smartphone interface. While there is a view from a lot of consumer electronics companies that the smartphone will remain incredibly important to our digital lives, there is a growing view actually that some of the workloads that we currently do on smartphones might actually move elsewhere. Whether that's just to some sort of voice interface, whether it's smart glasses, as we talked about in a previous episode with the Qualcomm CEO, or whether it's some entirely new type of category of devices. We are starting to enter a world where companies are thinking about what that might mean. It doesn't mean the phone's dead, as I said, but it means potentially the way we interact with these devices might be changing.
What's important to note here is, I guess Amazon's differentiation. If you actually think about the smartphone world, it's pretty much dominated on an operating system level by two companies, right? Or two operating systems even. It's Apple with iOS and it's Android. And that gives really Google and Apple very strong advantages in terms of being able to get access to lots of consumers with their services as well. Amazon's bet is different in many ways. It's not betting on just an operating system, but it's betting on Alexa being really key to all of its efforts as well.
ChatGPT and Gemini and some of these other AI apps primarily are right now living on your smartphones, but actually Amazon's saying we want Alexa to be across all these other different apps as well. And of course, it's got lots of different advantages. You think about its access to consumer information and data around shopping, streaming, gaming, lots of different information as well. And then these new key touch points as well, whether it's these Echo devices or other kind of devices in the Amazon ecosystem.
And the challenge for me as I think about it for Amazon is, if Google and Apple sort of have owned the big mobile ecosystems traditionally, does that continue in the new world or can Amazon take share with these new different types of gadgets and touch points and is Alexa+ going to be enough for Amazon to sort of expand beyond devices. For example, if you're using a smartphone, would you try to download Alexa+ for your smartphone, so that you're able to continue that journey with Alexa+ across all these different devices? That's a big question for me, and it of course, that comes down to a lot of the way that consumer habits are going to change.
Are we going to be in a world where if you look at the smartphone, you know, iOS users are so stuck to the iOS ecosystem and Apple apps, when you think about Android users, they often use a lot of Google surfaces or the services that are on the respective smartphone that they're using as well. And so, they're sort of caught in those different ecosystems. In this sort of AI agent world, are we going to be veering between different types of agents? And so does that mean we may be using you know whatever Apple brings out with Siri, and maybe what Google has with Gemini, maybe ChatGPT as well as Alexa, or are people going to start shifting to sort of one type of service. That's a big question for me, and of course the continued questions over whether consumers are going to be happy to have AI everywhere in their homes, in their cars, on their phones, in their watches and elsewhere. I think that's going to be another big question.
So Bee is so interesting because you know it's that screenless world, but it is a wearable of sort, you know it's on your wrist and so this is the foray into wearables. Again just from what I was speaking to Cristiano about, he was talking about devices getting more personal, all these different types. I remember there was a sort of fleeting moment in 2024 when these kind of pins went viral and you know didn't quite take off, perhaps too early there were a lot of issues with them, you know all those kind of things. But given I guess the focus on voice and other modalities with Alexa, Alexa+, you know how interesting are these types of devices to Amazon? I'm not saying you know give me the product roadmap, but just your thoughts on the types of devices.
Yeah, I think they're critical. Let's just say first in the home, I do think you know, you would say we maybe invented that device in the home 10 years ago. I think we're reinventing it right now for what's in the home. It's not done, but there's a baseline of definition that I think is very useful and makes people's lives better right now. Like if you're not using a Ring camera and a Fire TV with an Echo device, you're kind of missing a big part of simplicity in life.
But there's more than that. There's a whole road map of on-the-go devices that I think matter. And what is on-the-go? That's so cheesy, right? As a team, that's how we talk about it. So, I don't mean to bore you with it, but like what does it mean? Like what's a wearable? You know fundamentally, what are the things that people are going to carry with them in the future that matter and we already talked about the phone, so beyond the phone, like what are the other pieces of hardware that are collecting data, or that you're informing, or that you're talking to that are so important to you, so when you are back in the home, or when you are at work, that that connection stays consistent and contextual and back to that kind of concept.
Yeah well we'll keep an eye on anything coming out from Amazon on that front, and just the final form factor...
You won't have to wait long, you won't have to wait long, I don't think.
And just the final form factor I guess that is very exciting right now amongst various companies is smart glasses right. And again there's a lot of excitement because of the wearable aspect but because also the fact that they often have cameras and that gives you that more memory the personalization side of it etc. And I know Amazon's tried the Echo frames with some of the delivery drivers, what's going on the consumer side right now, how exciting a product is smart glasses at Amazon.
I think they're cool. I mean, you have to think about them as you know, they're like an extension of your eyes. Like what am I looking at? What do I see? I think it can enhance shopping, it can enhance listening, contextual awareness. I think it's a powerful category for sure. I think there's some cool products out there right now. I'll admit I don't use any of them. I have tried them. They haven't stuck, they haven't stuck with me. But I think there's ways to continue to make these products in a way where they will stick, and they'll be critical as an option.
But I'm going to say this again, Arjun, I don't think it's one form factor. I think people will get a little bit stuck, you know. There's some stat you can read that like 78% to 92% of people wear glasses, but both you and I are looking at each other without glasses on right now. So you know the math's not great. But I think that's all like, it just depends when you're wearing them, how you're wearing them. But my point there is, it's not that glasses isn't a great category, I think it actually could be. It's not that pins isn't a good category, to your point, I think it might have been a little bit early. I just think it depends on the person and ultimately what it means for customers.
And I think, I think customers are going to need choice. I don't think there's one form factor that wins them all. That form factor is already in your pocket. And I don't think there's another single form factor that does that, in my opinion. I do think fundamentally there's multiple types of devices coming and I think customers will have a choice and quite frankly you might wear multiple. Like right now I'm wearing a Bee and an Oura ring and they're both really important to me. One's collecting my health, the other one's just kind of, you know, managing me through my day. And when I get home, Alexa kind of summarizes both of them, which I would go back to like it's useful for me. Like makes my life, just that much better.
Even though this morning, I'll tell you, I woke up and Alexa told me I just, I haven't slept enough, so I got to work, I got to work...
That's what I'm scared of about these, you know, they just say, 'Hey, you're eating rubbish, you need to walk a bit more.'
