On May 21, OpenAI announced the acquisition of iO, the AI hardware startup founded by Jony Ive, for $6.5 billion. The all-stock deal, which requires no cash outlay for OpenAI, which already owned 23% of the company, marks a turning point for the artificial intelligence business, which is venturing into the consumer hardware market for the first time. The move aims to combine OpenAI’s software expertise with the design know-how of Apple’s former design chief to create an alliance that could redefine human-machine interaction in the era of generative AI.
However, the announcement has sparked a wide range of reactions, from praise for a strategic stroke of genius to concerns about what appears to be a “panic buy.”
What exactly is going on?
In short:
- The acquisition of iO marks OpenAI’s entry into consumer hardware, combining its software skills with Jony Ive’s design expertise to rethink human-machine interfaces in the age of generative AI.
- This strategic, all-stock transaction reflects a desire to diversify in the face of increased competition and could enable OpenAI to better control the user experience through advanced hardware-software integration.
- The initiative carries significant risks related to iO’s high valuation, the lack of existing products, the technical and UX challenges of AI devices, and the need to quickly monetize the investment.
- The project also appears to reflect a narrative repositioning by OpenAI, which is emphasizing usage and design rather than the direct pursuit of AGI, while capitalizing on this promise as a lever for internal and external mobilization.
- It is still too early to judge whether this acquisition is a tactical move under pressure or a controlled strategic pivot, but it clearly illustrates the tensions between technological ambition, market logic, and growth imperatives.
The details of the deal
OpenAI’s acquisition of iO represents the largest acquisition ever made by Sam Altman‘s business. Founded just one year ago by Jony Ive alongside former Apple executives, iO has yet to release any products.
This hardware startup specializing in AI devices had already received initial investment from OpenAI, which already held a 23% stake. From a purely “industrial” perspective, this deal represents a major shift in OpenAI’s strategy, moving from a purely software model to an integrated hardware-software approach.
The company is seeking to create interfaces optimized for generative AI, recognizing that current interaction concepts (keyboard, touch screen) may not be ideal for fully exploiting the potential of AI (Are OpenAI and Jony Ive headed for an iPhone moment?).
The transaction makes OpenAI the acquirer of an exceptional design team: Jony Ive, renowned for designing the iPhone, iPad, and Apple Watch, supported by Tang Tan (head of iPhone design until 2024), Scott Cannon (Mac and iPad teams), and Evans Hankey (Ive’s successor at Apple until 2023). This concentration of talent from Apple represents an unprecedented transfer of skills to the AI sector.
OpenAI’s stated ambitions
OpenAI has announced its intention to create “a new family of devices” (Sam & Jony introduce io) that will allow users to interact with AI in new ways. Sam Altman talks about the need for a “new form factor” to maximize the potential of AI, considering that this technology represents “such a leap forward” that it requires a completely rethought hardware approach.
From a purely technical perspective, public statements suggest a desire to create devices that complement existing smartphones rather than direct replacements (OpenAI is now planning a new screenless AI companion device). According to available information, the first product will not be a phone or glasses, but a device that can “sit in a pocket or on a desk” and complement the iPhone and MacBook Pro without replacing them (Sorry, Google and OpenAI: The future of AI hardware remains murky).
Altman’s ambition to sell 100 million units faster than any previous product is particularly ambitious. By way of comparison, Apple predicted sales of 10 million iPhones in its first full year in 2007, a target that was considered bold at the time.
Jony Ive, for his part, talks about devices that “inspire, empower, and facilitate”, evoking the “delight, wonder, and creative spirit” he felt when using an Apple computer 30 years ago. This rhetoric suggests an approach focused on user experience and emotion, characteristic of Apple’s design philosophy.
OpenAI’s hidden ambitions
Behind official statements, there are always hidden agendas, and we can try to discover what OpenAI is not telling us.
Several strategic motivations that have not been explicitly stated may explain this acquisition. First, OpenAI is probably seeking to secure its competitive position against tech giants such as Google, Apple, and Meta, which are developing their own integrated AI solutions.
By entering the hardware market, OpenAI would be trying to reposition itself vis-à-vis competitors that control access to AI, an area in which it is completely absent, forcing it to create new uses where others are bringing these uses to everyday products (Does OpenAI want to, should it, and can it become the new Google?).
The acquisition could also aim to create a closed ecosystem around OpenAI’s models, similar to the Apple ecosystem. By controlling both hardware and software, OpenAI could optimize performance, collect more user data, and create barriers to entry for competitors.
By controlling both AI models and hardware interfaces, OpenAI is seeking to optimize performance through advanced hardware-software integration, create barriers to entry that make its future models and even its AGI (if it ever arrives) incompatible with competing platforms, and shift the ethical debate toward user experience issues rather than existential risks.
This approach moves away from OpenAI’s original vision as a “digital public good” and embraces traditional capitalist logic.
From a business perspective, this could be seen as a strategy to diversify revenue. While OpenAI currently depends on ChatGPT subscriptions and API licenses, hardware opens the door to new models: device sales, related services, and potentially a hybrid subscription model combining hardware and AI services. This is a breath of fresh air in a sector that many say is structurally unprofitable (Generative AI: a bubble, a crash, or a turning point?).
Finally, the acquisition of iO can be interpreted as a preemptive defense against Apple. The past collaboration between OpenAI and Apple on “Apple Intelligence” has turned into a potentially competitive relationship. By partnering with former Apple executives, OpenAI is signaling its ability to attract top talent and challenge Apple on its own turf of industrial design.
Why it could work
Several factors point to the success of this initiative. The team’s exceptional design expertise is the main asset: Jony Ive and his team have proven their ability to create revolutionary products that redefine entire categories. Their track record with the iPhone, iPad, and Apple Watch demonstrates a unique mastery of hardware-software interaction.
For its part, OpenAI has the world’s most popular AI models, with over 400 million weekly users of ChatGPT. This massive user base provides a potential market ready to adopt new devices, especially if they significantly improve the AI experience.
The collaboration between Ive and Altman began two years ago, suggesting a mature thought process and shared vision rather than an impulsive decision. This gestation period may have allowed them to identify real user needs and design appropriate solutions.
The relative failure of previous AI systems such as Humane AI Pin also creates a favorable context, even if it raises questions: consumers are still waiting for the “right” AI product, and the iO team could be the one to deliver it.
Why it could be a failure
Nevertheless, several factors raise questions about the viability of the project. The astronomical price tag of $6.5 billion for a startup that has not released a single product logically raises questions. This valuation suggests exceptionally high performance expectations that could prove unrealistic, which is ultimately the general problem with the generative AI industry.
Recent failures in the sector weigh heavily on fears. The Humane AI Pin, sold as revolutionary, ended up being a resounding commercial failure ([FR]Humane: life and death of the startup that wanted to compete with the smartphone with its AI Pin), an experience that demonstrates that technological excellence does not guarantee mass adoption, especially for expensive devices with unclear use cases.
It is therefore to be hoped that OpenAI will have learned from this failure and will be able to find the answers. For now, AI wearables are struggling with major UX issues (latency, transcription errors), the hybrid business model (hardware + subscription) is struggling to convince ($0.24/month for Humane + a $699 device), and the lack of an application ecosystem is dooming standalone devices.
The recent history of Jony Ive since he left Apple does not raise doubts either. His projects via LoveFrom, although prestigious (Ferrari, Airbnb, Christie’s), remain design collaborations rather than revolutionary product creations. The $10,000 gold edition Apple Watch, which has been touted as a failure, also shows that he is capable of creating products that are disconnected from the market.
Finally, from a financial standpoint, OpenAI faces considerable financial challenges with huge infrastructure costs. This acquisition, even if paid for in shares, will generate operating costs and investments that risk dispersing resources and energy at a time when the business needs to consolidate its position in its core business in the face of intense competition from Google, Anthropic, and other players.
But the $6.5 billion invested creates immediate pressure for ROI that is incompatible with the long time horizons of AGI (assuming it is still relevant). There is a risk that roadmaps will now be dictated by product cycles rather than algorithmic advances.
In addition, by engaging in hardware, OpenAI is entering the playing field of Apple and Google, champions of incremental improvement, but this risks stifling its ability to produce disruptive technological leaps.
Ultimately, experts are not unanimous about the potential success of the initiative. The acquisition has surprised some AI employees and experts, who remain skeptical about OpenAI’s ability to succeed in a field as different as hardware, despite the presence of Jony Ive and his team (AI Experts React To Merger Of OpenAI And Jony Ive To Create AI Devices). Even internally, some employees, informed that the new product would be a “third device” between the iPhone and the MacBook, are questioning the relevance of such a positioning and its technical and commercial feasibility (Color Me Skeptical Over The Altman × Ive Merger).
There are therefore fears that this move is more of a risky gamble dictated by competitive and financial pressure than a carefully considered decision, which is fueling a climate of uncertainty within the teams and is therefore not good news.
And what about AGI in all this?
Since its inception, OpenAI has been built on a promise: to create artificial general intelligence (AGI). It is this ambition that justified its hypergrowth and colossal fundraising.
But in this operation, AGI is barely mentioned. The discourse is refocused on everyday usefulness, user-friendliness, design, and interface. There is talk of companions, fluid use, and experience. This shift in focus can be interpreted in two ways.
Either OpenAI believes that AGI is no longer the right review to engage the general public, too abstract, too anxiety-provoking, too speculative, or the company is redefining its strategic priorities: rather than racing toward a distant promise, it is seeking to generate concrete value in the present.
This acquisition may mark a real turning point: a business born to build AGI is beginning totake root in the “tangible present” of consumer tech.
It therefore seems that the hardware pivot reveals that AGI is no longer being used as a real technological goal, but rather as a mobilizing narrative.
There had already been warning signs, such as the dissolution in October 2024 of the “AGI Readiness” team responsible for model safety, Altman’s speech at MIT emphasizing that “AGI will emerge from use, not from laboratories”, and the partnership with Qualcomm for chips optimized for ChatGPT, to the detriment of fundamental research.
In any case, this change in discourse allows OpenAI to maintain its moral leadership in an increasingly competitive AI market, to attract talent through a compelling narrative (45% of new hires in 2025 cite AGI as their main motivation) and, who knows, negotiate with regulators by presenting hardware as a solution to the risks of purely software-based AI, all while pushing the question of the feasibility of AGI in the short term into the background.
Fear of a “panic buy”
In this context, one might wonder whether we are dealing with a “panic buy,” i.e., an impulse purchase to try to cling to the first branch that comes along. It’s the business version of “FOMO” (fear of missing out): no one wants to miss out on the opportunity that will make all the difference.
The operation was carried out quickly, with little communication about the planned integration or expected synergies. At first glance, all the ingredients for a panic buy seem to be there: increased competition from Google and Meta on AI agents, growing criticism of OpenAI’s lack of diversification outside ChatGPT, and the need to reassure a market that is always attentive to growth trajectories.
iO is a young startup focused on developing hardware that natively integrates artificial intelligence. Its positioning, which is still largely confidential, seems consistent with OpenAI’s ambition to go beyond software to explore new interface and usage formats. But the lack of concrete details on the roadmap leaves the door open to speculation. Does this acquisition mark a real strategic shift or simply a way to maintain OpenAI’s narrative momentum in the face of increasingly fierce competition?
Conversely, it could be seen as an opportunistic move, but one that is part of a broader strategic logic. With iO, OpenAI could begin a shift toward integrating AI into physical devices, in line with its ambition to anchor its technologies in more everyday uses, beyond chatbots alone. The move would thus extend a series of targeted acquisitions aimed at internalizing key skills and broadening the spectrum of hardware and software interfaces to better control the user experience.
In this context, it remains difficult to decide whether this is a hasty decision or a well-considered gamble. Everything will depend on what happens next: clarity on the integration of iO, the concrete nature of the projects announced, and OpenAI’s ability to demonstrate alignment between its technological ambitions, uses, and economic viability. At this stage, it is probably less a panicked move than a tactical positioning under severe constraints, revealing a moment of tension where promise, competitive pressure, and structural limitations collide.
Genius move, strategic pivot, or leap of faith?
This acquisition looks more like a calculated strategic pivot than a genius move or leap of faith. OpenAI is likely anticipating the gradual commoditization of AI models and seeking to create sustainable differentiation through integrated user experience.
The timing is important: OpenAI is acting at a time when current AI interfaces are showing their limitations and users are beginning to perceive the constraints of existing “paradigms.” The business is attempting to define the standards for the next generation of human-machine interfaces before its competitors establish themselves in this field.
This move reveals a maturity in OpenAI’s strategy, which understands that future value will lie less in AI models themselves than in their integration and accessibility. Taking inspiration from Apple’s model of vertical control over the user experience, OpenAI is seeking to create a defensible and profitable ecosystem.
However, this is not without risk.
First, the timing may prove premature if consumers are not ready to adopt new interaction paradigms, or if technological constraints (battery life, computing power, connectivity) limit the user experience. Success will depend on iO’s ability to identify and solve real user problems rather than creating attractive but useless technological gadgets.
Bottom line
OpenAI’s acquisition of iO is a major strategic gamble that could redefine the AI industry or prove to be a costly investment given the maturity of the market.
The combination of OpenAI and Jony Ive’s team undeniably creates one of the most promising collaborations in the contemporary tech industry, combining the most advanced AI with the most recognized design expertise. However, success will depend on their ability to transcend the legacy of well-established mobile paradigms to create true user-centric innovations, in a context where consumers remain skeptical of autonomous AI devices and competition is intensifying on all fronts of AI.
Image credit: Image generated by artificial intelligence via ChatGPT (OpenAI)
