OpenAI invests in hardware by acquiring Jony Ive's startup for $6.5 billion

OpenAI buys Jony Ive's startup io for $6.5 billion in a major hardware move.

: OpenAI has announced a significant $6.5 billion acquisition of io, an AI device startup co-founded by renowned Apple designer Jony Ive. This marks OpenAI's shift from software-only focus to an entry into the consumer hardware space. The io team includes approximately 55 engineers, many former Apple employees, aiming to create AI-powered devices for an era of artificial general intelligence. Ive and his team plan to shape the next wave of consumer technology with innovative design and anticipate debuting their first device in 2026.

OpenAI has made a bold move into the hardware market with the $6.5 billion acquisition of io, an artificial intelligence device startup co-founded by the famous former Apple designer Jony Ive. This substantial acquisition, completed in an all-stock deal, is OpenAI's largest to date and represents a fundamental transition for the company, which has primarily focused on software. Jony Ive, recognized for designing iconic Apple products like the iPhone and iPad, expressed that this venture signifies a pivotal moment in his multi-decade career. In a joint interview with OpenAI CEO Sam Altman, he remarked, 'I have a growing sense that everything I've learned over the last 30 years has led me to this place and to this moment.'

The deal brings seasoned talent together, combining Jony Ive with former Apple colleagues, including Evans Hankey, Tang Tan, and Scott Cannon. Hankey previously succeeded Ive as Apple's hardware design chief, while Tang led product design for the iPhone and Apple Watch until 2024. Moreover, Cannon co-developed the Mailbox app after his tenure at Apple. The io team comprises approximately 55 engineers, developers, and manufacturing experts, many of whom have roots at Apple, emphasizing the high level of expertise being combined under OpenAI.

Part of OpenAI's interest in acquiring io is based on a previous relationship; the company had already acquired a 23% stake in io in late 2024. OpenAI is offering $5 billion in equity as part of the transaction, with the remainder reflecting this prior investment. The acquisition is scheduled to close in the upcoming summer, subject to regulatory approval. The overall objective is ambitious: to redefine how people interact with technology by creating a new suite of AI-powered devices. Sam Altman aims to produce consumer hardware with an unprecedented quality level, believing that AI's potential necessitates a novel computing form factor.

OpenAI's and Jony Ive's partnership will embark on designing new hardware concepts, targeting their first device release by 2026. Both have clarified that their efforts are not intended to replace existing technology like smartphones but instead to complement and expand current capabilities. Reflecting on historical technology shifts, Altman pointed out, 'In the same way that the smartphone didn't make the laptop go away, I don't think our first thing is going to make the smartphone go away.'

The strategic move arrives as Apple's innovation in AI faces scrutiny due to its partial reliance on technologies like OpenAI's ChatGPT. Despite some products, like Meta's Ray-Ban smart glasses, capturing some market traction, other AI hardware ventures have struggled. Ive cited the Humane AI Pin and Rabbit R1 as deficient in quality, noting a general lack of innovative thinking in recent AI products. The acquisition by OpenAI could position it to effectively address these market gaps, with LoveFrom, Ive's design collective, taking over its design and software responsibilities to drive the venture forward.

Sources: TechSpot, Bloomberg, The Verge

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