OpenAI buys Jony Ive's AI hardware firm for $6.4 billion

On May 21, 2023, OpenAI announced that it is acquiring Jony Ive's AI devices startup, io, in an all-equity deal valued at approximately $6.4 billion. This move positions OpenAI firmly in the hardware domain, a strategic shift aimed at enhancing its generative AI capabilities by ensuring direct distribution to users. Jony Ive, former Chief Design Officer at Apple, is taking on "deep creative and design responsibilities" across both OpenAI and io, while his design collective, LoveFrom, remains independent. Founded about a year ago by Ive, alongside Apple alumni Scott Cannon, Tang Tan, and Evans Hankey, io has been dedicated to developing innovative products that inspire, empower, and enable users. The team consists of 55 hardware engineers, software developers, and manufacturing experts, who will join OpenAI to collaborate closely with the research, engineering, and product teams in San Francisco. This merger signals OpenAI’s commitment to integrating cutting-edge design and hardware expertise, crucial for advancing its AI applications in the physical world. The acquisition is OpenAI’s largest to date, following its recent $3 billion purchase of the AI-assisted coding tool, Windsurf. Prior to this, OpenAI had acquired Rockset, an analytics database company, for an undisclosed amount in 2024. OpenAI’s decision to bring io in-house underscores its broader strategy to stay competitive in the rapidly evolving generative AI market, where tech giants like Google, Anthropic, and Elon Musk's xAI are making significant investments. Jony Ive, widely regarded as one of the greatest industrial designers in history, played a pivotal role in shaping some of Apple's most iconic products, including the iPod, iPhone, iPad, and MacBook Air. Additionally, he was instrumental in designing Apple’s Cupertino headquarters, Apple Park. After leaving Apple in 2019, Ive founded LoveFrom, which has since consulted for high-profile clients like Airbnb, Christie's, and Ferrari, reportedly charging up to $200 million per year. OpenAI’s CEO, Sam Altman, has expressed high regard for Ive, calling him "the greatest designer in the world." Altman believes that combining io's design prowess with OpenAI’s advanced AI technology will create a new generation of products that foster closer, more meaningful interactions between humans and AI. The initial devices developed under this partnership are expected to launch in 2026, and they are not intended to replace existing technologies but to complement them, much like how smartphones coexist with laptops. In the current landscape of generative AI, the competition has shifted from merely creating the best models to securing robust distribution channels. While AI models are becoming increasingly similar in performance, their widespread adoption and regular usage can significantly differentiate them. This is where distribution plays a critical role. Companies like Google, with its vast ecosystem and deep integration into users' daily lives, have a significant advantage in getting AI products into users' hands. OpenAI aims to circumvent this challenge by building its own hardware, thereby ensuring a more direct and controlled relationship with its user base. Altman and Ive’s collaboration has been ongoing for two years, exploring various hardware concepts ranging from headphones to camera-equipped devices. One prototype, described by Altman as "the coolest piece of technology that the world will have ever seen," has particularly captivated the team. Ive emphasizes that the focus is on creating new kinds of devices rather than trying to outcompete established ones like the iPhone. He believes that current AI hardware, such as the Humane Pin and Rabbit R1, represents "poor products" due to a lack of innovative thinking. Industry insiders view this acquisition as a bold and strategic move by OpenAI. By bringing in a world-class designer like Jony Ive, the company is not only strengthening its hardware capabilities but also signaling its intent to deliver products that are visually appealing and user-friendly. This approach aligns with Altman's vision of creating AI tools that are both powerful and accessible. The integration of design and engineering excellence could accelerate OpenAI's progress in the race to develop and deploy general-purpose AI in the physical world, potentially outpacing competitors like Google and Meta. Additionally, controlling distribution allows OpenAI to collect valuable user data, which is essential for training and refining AI models. This data feedback loop is crucial for continuous improvement and maintaining a competitive edge in the generative AI arena. With Ive and his team at the helm, OpenAI is poised to explore new frontiers in AI hardware, ensuring that its technology reaches users directly and effectively. OpenAI’s valuation of $300 billion, secured in a recent funding round led by SoftBank, underscores the company’s financial strength and confidence in its future. This robust capital base enables OpenAI to make such significant acquisitions and investments, solidifying its position as a leader in the AI industry. The company’s recent hires, including Caitlin Kalinowski, the former head of Meta’s augmented reality initiative, further reinforce its commitment to hardware and robotics. The acquisition of io is thus a multi-faceted move that addresses OpenAI's hardware needs, distribution challenges, and data collection goals. As the tech industry continues to witness rapid advancements in AI, the integration of world-class design and engineering expertise is set to play a pivotal role in shaping the future of AI-assisted devices and experiences.