OpenAI Acquires Startup for $6.5 Billion To Build Next-Gen AI Devices
The company hopes to make hardware that will redefine human-AI interaction
Welcome to another edition of AI 101, where every Wednesday we bring you the biggest AI update of the week.
This Week’s Update: OpenAI Acquires Jony Ive’s io Startup for $6.5 Billion with Plans To Release an Undisclosed AI Device
On May 21st, OpenAI announced it was acquiring product-development company io for $6.5 billion in an all-stock deal. The year-old startup was founded by Jony Ive, the former Apple executive who designed the iPhone. As part of the deal, Ive and his team will receive expansive creative and design control at OpenAI.
The goal of the venture is to build a “family of new devices” that not only allow users to better interact with OpenAI’s technology but also upend the dominance of legacy products like the smartphone. However, it remains unclear what this hardware will look like. OpenAI CEO Sam Altman has indicated that their first AI device will be screen-free and aware of the user’s environment.
What is clear is the extent of the team’s ambitions. Altman plans to release the undisclosed product by the end of next year and ship 100 million devices “faster than any company has ever shipped 100 million of something new before.”
Why This Is Important
OpenAI’s acquisition of io presents a considerable risk for the company. Past attempts at creating AI devices have failed; Humane’s AI Pin and the Rabbit r1, portable devices that replace or complement the smartphone, received overwhelmingly negative reviews and proved ruinous for the companies that made them.
To make matters worse, OpenAI is highly unprofitable due to AI’s development costs. The company is under pressure to raise revenues and is counting on aggressive growth to become profitable by 2029. Altman has publicly dismissed financial concerns related to the $6.5 billion acquisition, suggesting that the deal could add $1 trillion in value to OpenAI.
In a video announcement, Altman made bold claims about the potential of the planned device: “Jony called one day and said, ‘This is the best work our team has ever done.’ I mean, Jony did the iPhone; Jony did the MacBook Pro.” If Ive and his team succeed in developing a new type of device for the AI era, OpenAI could revolutionize the way people use technology in their daily lives.
Quick Hits:
On May 22nd, Anthropic released Claude 4, a new series of models that outperform top competitors on agentic coding and software engineering benchmarks.
Last week, OpenAI announced plans to build a massive computing complex in the United Arab Emirates that is expected to be operational next year.
Thx for the post. The AI 101 seems to always have the most important news right when it happens!