Alexa, Should I Pay for Alexa+? Or Get a New Echo?

CIRP has shown that ownership of Amazon Echo smart speakers has plateaued. Now, Amazon has announced an AI-powered version of Alexa, the interactive voice assistant that defined Echo devices. Alexa+ intends to make Echo smart speakers more useful and conversational, and help Amazon catch up in the AI sector.

When rumors first started that Amazon would launch AI-powered Alexa, we asserted existing Echo owners would not likely embrace this enhancement, at least based on current usage patterns and use cases. Now we know the terms: Amazon will charge $19.99 per month for Alexa+ for use on Echo devices and through a web browser. Amazon Prime membership will include Alexa+.

We suspect Alexa+ will be seen as another benefit of a Prime membership and as a software upgrade for most Echo owners, rather than a material source of additional subscription revenue. It may boost sales of Echo devices a little.

As it turns out, most Echo owners already have a Prime membership. In 2024, 88% of Echo owners were also Prime members, compared to 70% of Amazon customers without an Echo device (Chart 1). The most likely Alexa+ users, Echo owners with multiple devices, are even more likely (92%) to already have a Prime membership.