365 Days to $500M: Altman and Ive’s AI Device Startup Could Be OpenAI’s Next Big Bet

OpenAI is in discussions to acquire a hardware startup that CEO Sam Altman has been developing with former Apple design chief Jony Ive for a potential price exceeding $500 million, according to a report from The Information published today.

The duo’s venture, known as io Products, aims to create AI-powered personal devices that align with Altman’s vision of voice-enabled assistants reminiscent of science fiction. The acquisition talks come just as the tech world reflects on 2024’s biggest hardware flops—including the much-hyped Rabbit R1 and Humane Ai Pin, which failed to deliver on their AI assistant promises despite significant funding and publicity.

The Rabbit R1, while aesthetically pleasing with its colorful retro design, struggled with basic functionality and eventually retired most of its third-party integrations after disappointing performance. Meanwhile, Humane’s Ai Pin suffered from severe overheating issues, with users reporting the device needing to “cool down” regularly during use.

Unlike these unsuccessful competitors, the Altman-Ive collaboration brings together OpenAI’s cutting-edge artificial intelligence with Ive’s legendary design expertise that shaped Apple’s most iconic products. The partnership, which began over a year ago, has already received funding from Laurene Powell Jobs’s Emerson Collective.

According to sources familiar with the negotiations, OpenAI and io Products are discussing both a full acquisition and alternative partnership arrangements. If completed, an acquisition would bring io Products’ engineering team into OpenAI, potentially including former Apple designers Tang Tan and Evans Hankey who recently joined the hardware startup.

While designs remain in early stages, potential products include a “phone” without a screen and various AI-enabled household devices that aim to create “a computing experience that is less socially disruptive than the iPhone,” as previously described by Ive.

The potential acquisition represents OpenAI’s expanding portfolio of consumer-focused initiatives and could put the company in direct competition with Apple, despite their existing partnership to integrate ChatGPT with Siri.

As Altman and Ive pursue their vision with the apparent Midas touch of tech’s most successful figures, they’ll need to avoid the pitfalls that doomed this year’s AI hardware devices, which promised revolutionary experiences but delivered disappointing performance, overheating issues, and half-baked features.