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OpenAI's $6.5B acquisition of Jony Ive's startup could reshape how we interact with AI. But first, the iPhone designer must solve a puzzle that's stumped the industry: What comes after smartphones?
OpenAI is buying Jony Ive's hardware startup io for $6.5 billion, betting that Apple's former design chief can create new devices that change how we use AI. The deal puts Ive, who shaped the look of the iPhone and iPad, in charge of designing OpenAI's future hardware products.
The partnership started quietly two years ago when Ive and OpenAI CEO Sam Altman began exploring ideas together. Now it's expanding dramatically: Ive's team of 55 engineers and product designers will join OpenAI to build what they call "a new family of products." His design firm LoveFrom will also lead creative work across OpenAI's products, from ChatGPT's interface to upcoming devices.
Both leaders want to move beyond smartphones. Ive says people feel uneasy with current technology, while Altman compares using today's devices to "being jostled on a crowded street in New York." Their first products should arrive in 2026.
The deal marks a striking shift in Silicon Valley's power dynamics. Ive spent 27 years at Apple, working closely with Steve Jobs to create products that transformed how we live. Now he's betting that AI needs entirely new kinds of devices.
For Apple, losing Ive to an AI rival stings. The company lags behind in AI development and now watches its legendary designer build products for a new era. Apple shares dropped 2.3% on the news.
OpenAI will pay mostly in stock, valuing io at $6.5 billion. The company already owned 23% of io through earlier investments. The deal needs regulatory approval but should close this summer.
The acquisition shows how far OpenAI has come since releasing ChatGPT in 2022. Now valued at $300 billion, it expects $3.7 billion in revenue this year. The company is also buying AI coding startup Windsurf for $3 billion.
Ive and Altman are tight-lipped about their plans. But early work focuses on moving AI interactions beyond screens. They're exploring options like headphones with cameras and other devices that blend AI naturally into daily life.
The team will work from io's office in San Francisco's Jackson Square and OpenAI's headquarters. Peter Welinder will lead the hardware division, reporting to Altman.
For Ive, the move marks a return to big consumer tech after leaving Apple in 2019. He sees AI as the next major shift in computing, comparing the moment to Apple before the iPod and iPhone.
"I shoulder a lot of responsibility for what these things have brought us," Ive said about smartphones. He now wants to create devices that help people make sense of an overwhelming digital world.
Recent attempts at AI devices have flopped. The Humane Ai Pin and Rabbit r1 failed to catch on. But Ive dismisses these as "poor products" lacking fresh thinking.
"It's a crazy, ambitious thing to make," Altman said about their plans. "It will be worth the wait."
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