OpenAI’s $6.5B Bet: The iPhone of the AI Era

In a bold move to redefine how we interact with artificial intelligence, OpenAI has acquired io Products, the hardware startup co-founded by legendary Apple designer Jony Ive, in a deal valued at $6.5 billion. Alongside the acquisition, Ive will step in as Creative Head at OpenAI, tasked with developing new AI-native devices designed specifically for the generative AI age.

Ive, the design visionary behind the original iPhone, founded LoveFrom after leaving Apple, and has quietly collaborated with OpenAI for the past two years on hardware projects meant to unlock new forms of human-computer interaction. Their ambition: to create devices that move beyond the decades-old paradigms of smartphones and laptops.

“The products we’re using to access unimaginable technology are decades old,” OpenAI CEO Sam Altman and Ive remarked in a joint video announcement. “It’s just common sense to imagine something beyond these legacy devices.” Altman revealed that a prototype device is already in development, calling it “the coolest piece of technology the world will have ever seen”, though he stopped short of offering specifics.

The acquisition signals OpenAI’s clear intention to take control of the next hardware platform, much like Meta’s efforts with Quest VR headsets and smart glasses, or Google’s ventures into AI-powered devices. The deal also reduces OpenAI’s dependency on distributing its services through Apple’s iOS and Google’s Android ecosystems, a move analysts see as strategic.

Disrupting an Unstable AI Hardware Market

While the AI hardware space has proven tricky for newcomers — with startups like Humane AI struggling to gain traction for their AI Pin device due to heat issues, poor battery life, and a high price tag — OpenAI’s combination of cutting-edge software and world-class industrial design could give it a critical edge.

Humane AI’s recent acquisition by HP for just $116 million highlights the volatility of this emerging category. Meanwhile, Rabbit’s r1 device has sold over 100,000 units, though critics say its capabilities still fall short of replacing a smartphone.

With this acquisition, OpenAI positions itself to lead not just in AI software, but in the devices we’ll use to interact with it — effectively building the iPhone of the AI era.

Side note

Industry insiders are closely watching how this partnership might influence Apple, whose AI rollout has been noticeably slow, with features like Apple Intelligence still lagging behind what Android rivals offer natively. The fact that Apple’s stock slipped over 2% following the announcement signals investor concern that Cupertino may be losing ground in the AI hardware race.

(Pictured with Jony Ive and Sam Altman)