OpenAI Unites With Jony Ive in $6.5 Billion Deal to Create A.I. Devices
OpenAI said it was buying io, a start-up founded by Mr. Ive, the designer of the iPhone, to usher in a new era of artificial intelligence hardware.
The rise of artificial intelligence has profoundly altered the technology world in recent years, upending how software is created, how people search for information, and how images and videos can be generated — all with a few prompts to a chatbot.
What the technology has yet to do, though, is find a preferred form in a physical, everyday gadget. A.I. largely remains the domain of an app on phones, despite efforts by start-ups and others to move it into devices.
Now OpenAI, the world’s leading A.I. lab, is taking a crack at that riddle.
On Wednesday, Sam Altman, OpenAI’s chief executive, said the company was paying $6.5 billion to buy io, a one-year-old start-up created by Jony Ive, a former top Apple executive who designed the iPhone. The deal, which effectively unites Silicon Valley royalty, is intended to usher in what the two men call “a new family of products” for the age of artificial general intelligence, or A.G.I., which is shorthand for a future technology that achieves human-level intelligence.
The deal, which is OpenAI’s biggest acquisition, will bring in Mr. Ive and his team of roughly 55 engineers, designers and researchers. They will assume creative and design responsibilities across OpenAI and build hardware that helps people better interact with the technology.
In a joint interview, Mr. Ive and Mr. Altman declined to say what such devices could look like and how they might work, but they said they hoped to share details next year. Mr. Ive, 58, framed the ambitions as galactic, with the aim of creating “amazing products that elevate humanity.”
“We’ve been waiting for the next big thing for 20 years,” Mr. Altman, 40, added. “We want to bring people something beyond the legacy products we’ve been using for so long.”
Mr. Altman and Mr. Ive are effectively looking beyond an era of smartphones, which have been people’s signature personal device since the iPhone debuted in 2007. If the two men succeed — and it is a very big if — they could spur what is known as “ambient computing.” Rather than typing and taking photographs on smartphones, future devices like pendants or glasses that use A.I. could process the world in real-time, fielding questions and analyzing images and sounds in seamless ways.
Mr. Altman had invested in Humane, a company that pursued this kind of vision with the creation of an A.I. pin. But the start-up folded not long after its product flopped.
In their interview, Mr. Ive expressed some misgivings with the iPhone and said that had motivated him to team up with Mr. Altman.
“I shoulder a lot of the responsibility for what these things have brought us,” he said, referring to the anxiety and distractions that come with being constantly connected to the computer in your pocket.
Mr. Altman echoed the sentiment. “I don’t feel good about my relationship with technology right now,” he said. “It feels a lot like being jostled on a crowded street in New York, or being bombarded with notifications and flashing lights in Las Vegas.” He said the goal was to leverage A.I. to help people make some sense of the noise.
As part of the deal, Mr. Ive and his design studio, LoveFrom, will remain independent and continue to work on projects separate from OpenAI. Scott Cannon, Evans Hankey and Tang Tan, who also founded io with Mr. Ive, will become OpenAI’s employees and report to Peter Welinder, a vice president of product, who will oversee the io division. The acquisition is a significant windfall for Mr. Ive.
OpenAI and LoveFrom declined to disclose financial specifics, including whether the $6.5 billion deal would be paid in cash or stock. The deal is subject to regulatory approval.
OpenAI already owned a 23 percent stake in io as part of an agreement between the two companies at the end of last year, two people with knowledge of the deal said, so it is now paying around $5 billion to fully acquire the start-up. OpenAI separately has a Start-up Fund that invested in Mr. Ive’s start-up last year, the people said.
(The New York Times has sued OpenAI and its partner, Microsoft, for copyright infringement regarding news content related to A.I. systems. OpenAI and Microsoft have denied the claims.)
OpenAI set off the A.I. boom in late 2022 when it released the ChatGPT chatbot. In March, the start-up completed a $40 billion funding that valued it at $300 billion, making it one of the world’s most valuable private companies. The fund-raising round was led by the Japanese conglomerate SoftBank.
As it has grown, OpenAI has struggled to adopt a new corporate structure. Founded in 2015 as a nonprofit organization, the A.I. lab has been trying to reinvent itself as a for-profit company so it can more easily raise money from investors. If it does not restructure by the end of the year, SoftBank could halve its investment in the company.
That makes the billions that OpenAI is paying for Mr. Ive’s start-up a steep outlay, especially as the start-up is also unprofitable. Building the technology that powers ChatGPT and other services is enormously expensive, and OpenAI is under pressure to raise revenues.
OpenAI expects about $3.7 billion in sales this year and about $11.6 billion next year, according to financial documents reviewed by The Times. The company is also in talks to acquire Windsurf, an A.I.-powered programming tool, for about $3 billion.
Asked how OpenAI would find the money to buy io, Mr. Altman said the press worried about OpenAI’s funding and revenues more than the company did.
“We’ll be fine,” he said. “Thanks for the concern.”
The deal came together after Mr. Ive, a protégé of Apple’s founder, Steve Jobs, who designed the iPod and many other products, became intrigued by A.I. He felt somewhat lost after leaving Apple in 2019, he said, and was eager to find his next act.
wo years ago, Charlie Ive, one of his 21-year-old twin sons, told him about ChatGPT, Mr. Ive said. Curious about his son’s excitement over the chatbot, Mr. Ive connected with Mr. Altman. They became friends.
Mr. Ive said he was so enamored with the technology that he founded io last year with several peers to conceptualize new hardware products suited to A.I. By early this year, it became clear that he and Mr. Altman wanted to form a partnership to work on a new generation of devices, he said.
Mr. Ive said the partnership was not being led by a fiscal imperative but from a place of building products that “benefit humanity.”
“I believe everything I’ve done in my career was leading to this,” he said.
