OpenAI's $6.5B bet on Jony Ive could redefine how people interact with technology
OpenAI just made its biggest move yet -- buying Jony Ive's AI startup -- with hopes of building something that feels as magical as the first iPhone.
Image Credit: OpenAI
Initially, it was reported that OpenAI would buy Jony Ive's AI startup, simply named "io", for $500 million. To say that the actual sale cost was a bit higher would be an understatement.
The final sale price wound up being nearly $6.5 billion -- in stock.
Bloomberg points out that OpenAI is paying $5 billion in equity for io. The balance of the nearly $6.5 billion stems from a partnership in late 2024 that involved OpenAI acquiring a 23% stake in io.
The purchase now marks OpenAI's largest acquisition and signals the AI research and deployment company's transition into creating hardware. The deal is expected to be finalized in the coming months, assuming it passes regulatory approvals.
The deal is expected to add 55 new employees to OpenAI, including hardware engineers, software developers, and manufacturing experts, according to Bloomberg. These new hires will help realize Ive and Altman's vision for a family of devices.
A nine-minute-long video posted to OpenAI's website features Jony Ive and OpenAI CEO Sam Altman discussing how the partnership came to be and what their hopes are going forward. There are many cryptic references to "the device," presumably something that the pair hopes to release as soon as 2026.
"Jony recently gave me one of the prototypes of the device for the first time to take home," Altman says. "I've been able to live with it and I think it's the coolest piece of technology that the world will have ever seen."
There's no way to know for sure what the device is -- though current speculation points to a voice assistant of some kind. Ive does mention that he believes the world is ready for something entirely new.
"The products that we're using to deliver and connect us to unimaginable technology -- they're decades old," Ive says. "It's just common sense to at least think 'Surely, there's something beyond these legacy products.'"
What is certain, however, is how excited the pair seems to be about the deal.
"What it means to use technology can change in a profound way," Altman says. "I hope we can bring some of the delight, wonder and creative spirit that I first felt using an Apple Computer 30 years ago."
Previously, it was reported in 2024 that Ive had been looking for investors to provide funding of $1 billion for the unknown device, or devices. Subsequently, Laurene Powell Jobs is said to have invested an unknown sum through her Emerson Collective, as have other companies.
Jony Ive left Apple in 2019 to found his own design company, LoveFrom, and has since hired many ex-Apple staff, including his own replacement, Evans Hankey. Ive also hired ex-Apple design lead Tang Tan specifically to work on the AI startup collaboration with Sam Altman.
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My opinion only. YMMV. If you enjoy this stuff, great. I'm happy for you.
Apple is behind in AI (LLM, Siri, their GPU capacity, human resources for AI etc.).
Apple is behind in their HW. Apple is launching foldables.... when??
Apple has been rotten with their timid updates for iPhones. Camera gets better and better, but not much.
iPhone 17´s design is rotten.
I mean.... What isn´t rotten?
I do not expect too much from io or OpenAI, but I hope they prove me wrong.
At the end, it is due that we really need "cool" devices nobody is thinkg about yet.
Rotten Apple.
I understand your perspective, but it would have been easy enough to say you were "all mobile phone'd out" before the iPhone debuted. The mobile phone market was already very crowded, had been for years, and Blackberry was the much beloved king of the hill. And then Apple had a different idea. I don't know that this is going to be good--whatever "this" turns out to be--but if any two people on the planet can completely reinvent the idea of what an AI device might be, it's Ive and Altman.
Foldables? Yeah, it's in the works but they're expensive and target a very niche market. Still looks like a nerd-driven fad that would have been cool a decade ago, but XR has solved the problem foldables were meant to tackle -- more screen, less space.
iPhone 17 hasn't released yet.
And every "AI first" piece of hardware that has released so far has been an abject failure. Ive is a legendary designer, but design can't make up for lack of interest or use case.
This can conversely mean something interesting may up between the two, not necessarily an "undefined" negative. I mean, Open AI is not a huge HW company, though they have aspirations.
And conversely (again), if Apple ends the agreement with Open AI in the future and goes in a different direction, you'll know I was pissin in the wind....
AI is uncooked and still a lot of hallunications. But what if Apple even can´t deal with uncooked stuffs? You think Apple can present something which is cooked even if Apple is so worse than uncooked stuffs?
We may just "play" with LLMs and LLMs may have a limited use case as of today, but LLMs could be a basic "weapon" to create something nobody is thinking about yet..
But yeah.. Apple can´t cook AI, but Tim is cooking Apple in a bad way.
Does it exist?
iPhone 17 has not released yet, but we all know how they look like.
"Jony recently gave me one of the prototypes of the device for the first time to take home," Altman says. "I've been able to live with it and I think it's the coolest piece of technology that the world will have ever seen."
Way to keep expectations reasonable, Mr. Altman.
Will this be transformative like the Segway or like the iPhone? Or somewhere in between. I guess we'll find out.
I've always been impressed with Jony Ive's creativity and human-centric approach to solving problems. I do not believe that he is an idealist who is unwilling to weigh the balance of competing motivations that are intrinsic to product development. On the other hand he is going to fight very hard to get as many of his objectives met in terms of how the final product looks, feels, and works. The last thing you want on a product development team are a bunch of yes men/women who cave in too easily in trying to get their ideas considered. There is always give and take, but if you compromise too much you end up with a product that does nothing exceedingly well, like Windows.
With this new combined venture Jony has much more freedom to roam and fill in some of the major voids that exist in the current AI space, which is still evolving, more rapidly in some places than others. I'm not talking about features, functions, problem domains, and even the human-AI interaction. I'm talking about very basic things like trust. I use ChatGPT multiple times every single day, but I recognize its weaknesses, infallibility, knowledge gaps, and occasional hallucinations. I trust it only to the extent that I can given its current weaknesses. But I do trust it enough to use it.
I think I'm in the minority in terms of trusting AI at all. Until a wide population regular users develop some sort of trust in AI, even if only within narrow and restricted domains, they aren't going to use it and are not going to trust companies and services that use AI as part of conducting business. Too many companies, Apple included, are positioning AI is a some sort of universal utility that can solve any problem, even when evidence points to the exact opposite.
Hopefully, Jony Ive will contribute to making AI and/or AI infused products more trustworthy because he truly understands people better than most. Until AI is trustworthy, for a lot of people it's a dog and pony show or a just way to cheat on term papers. But even in its current form, with AI tools like ChatGPT, it is so much more.
I liked it when Apple was using AI-like technology to solve very specific problems in very specific products and not really talking about it a whole lot. The faster the AI wheel spins, the vaguer, more abstract, and jello-like it becomes. If Apple is behind the curve on AI it's because they couldn't figure out exactly what it really was and how it would materialize into a product that customers would buy. Few, if any, people would pay for Siri itself, and Siri's influence on product sales is probably not as good as Apple would like it to be.
Apple is a product company with tightly bound services that support their products. It's easy enough to plop an iPhone into a customers hand or a Mac Studio on to somebody's desktop. If Siri comes along for the ride, no big deal. The problem is that Siri never graduated from being a product feature to being a system feature, at least in my opinion. It even works differently on different products. Again, in my opinion, Apple has repeated the same mistake with Apple Intelligence. By limiting Apple Intelligence to certain products, it certainly appears to be yet another product feature. I don't really care why this is the case, and I know why it is, but this is a bottoms-up approach to solving a system problem, which I believe are much easier to solve starting from the top down, like Apple Music, iCloud, the App Store, etc.
This begs the question, why did Jony Ive not play a bigger role in making Siri better? I don't even know whether he was involved at an architectural level or even saw it as a system capability. With Jony Ive involved in OpenAI we'll get to see whether he has a way to do more with AI technology than Apple did with Siri technology.
Get the billionaires out of the White House. The billionaires are just more and more power in fewer and fewer hands. Boycott their businesses until they get out of the White House. Boycott Tesla until Elon is removed as CEO.
Further you haven't even made the case for your claims that "Apple is behind". How are their LLMs behind? How is their GPU capacity behind? How are their human resources behind? You just state these things as facts sans any sort of evidence. With Siri I can kind of see where you are coming from. But drawing a larger "Apple is behind on AI" based on a few cherry picked things is pretty weak. Your argument for being behind on hardware is even worse. A lack of foldable is really all you got? At least pick a product category that is vaguely popular, jeez.
They will sell devices that always monitor what you're doing and observe your behaviors and start interacting with you to encourage you to do things.
You don't need to wear anything. Devices are always watching you. TV turns on automatically. Lights turn on automatically.
Foods get prepared with their "cooking" devices.
Cars come to you and take you around.
They function as watch dogs and alert you of any intruders.
They will interact with you if you appear bored or lonely.
For all of the wonders of AI (LLM in particular) no one has still figured out how to make a profit from it. For now they are all startups bleeding cash left and right. Some of them are "inside" companies that can bleed cash for a long time (Google) others have a lot of financing (OpenAI). But, soon, the time will come when the business model has to be sustainable. I imagine Altman knows that and, I think, the move with Ive is to finally create something that can be sold and generate cash. I know there are subscriptions to ChatGPT but these are nowhere near able to cover R&D and/or operating costs.
The great defining moment for the industry won't be "which model is better" but which business model is able to sustain itself in the long term.
Also, as it currently stands (I am not a heavy user so maybe I am wrong) I don't see MAJOR differentiating factors among the various AIs. They are just, for the time being, a wonderful amazing free commodity (you can switch from one to the other). And this, as we still are in a capitalist economy, won't last.
Lastly, maybe it's just me, but I often find these "AIs" incapable of doing stuff which would help me.
An example: I take photos of buildings, for technical purposes (job). I asked ALL of the models: "Hey model, can you please calculate the height of the building based on this set of pictures". All of them came out empty handed. Some suggesting I could pixels myself. Very un-useful.
AI now "knows a lot" (sometimes false information) but, as it stands, cannot do a lot, at least beyond what programmers seem to value.
Google's I/O in that regard, with the bicycle video, seemed at least aware there's more that can be done. OpenAI instead seems to struggle to go beyond the "chatbot" version. For all of the cool hardware they might come up with, other models seems to embrace different aspects.
Let's wait and see what happens.