Earlier today, OpenAI announced an intriguing deal that would have seemed outlandish just a few years ago. As you’ve probably seen, OpenAI is buying Jony Ive’s startup “io.” The price tag is significant, with OpenAI set to shell out about $6.5 billion in equity. Clearly, something big is brewing.
In a press release on the matter, OpenAI states that the goal of the acquisition is to “develop, engineer and manufacture a new family of products.” In short, Jony Ive, the famed industrial designer who, along with Steve Jobs, helped rescue Apple from the brink of bankruptcy, will seemingly be designing hardware for another company.
Expectedly, the acquisition has generated an absolute avalanche of commentary, with many taking the position that Apple is perhaps so far behind in the AI race that it has no hopes of catching up. This is only underscored by the fact that Ive’s team of designers and software engineers is undeniably impressive and boasts quite a few former folks from Apple. Taken together with OpenAI’s increasingly powerful software, some are arguing that Apple has already lost the AI arms race.
To wit, check out this comment on Bluesky:
This is such bad news for Apple. Not cause of Ive, cause I’m not sure he still has his fastball, as it were. But because we’ve been hearing the real play for AI is to kill the iPhone. And Apple is sooooooo… far behind on AI.
I’ve seen many similar takes today, and anyone who has followed Apple over the years knows the doom and gloom predictions are nothing new. And as we’ve seen in the past, these dire predictions about Apple are often heavy on sensationalism and light on cold, hard facts.
To be fair, the acquisition is eye-opening and, dare I say, exciting. Who knows what type of wizardry might result from the acquisition?
Hardware is no small feat
At the same time, hardware is hard. Really hard. Mobile phones today are so advanced that anything positioned to replace or even complement them faces an uphill battle from the outset. In other words, there’s no reason just yet to assume that this acquisition will have any meaningful impact on Apple. Again, hardware is challenging, as many learned the hard way with the Humane AI pin. Despite chatter that AI is going to do away with mobile phones and usher in a new world with AI-centric gadgets, there’s not much evidence to suggest it will happen anytime soon, if at all.
In other words, do the masses want AI devices? Or do they simply want smartphones with advanced AI capabilities? The evidence to date suggests it’s the latter.
It’s also worth noting that Ive, since leaving Apple, hasn’t done anything eye-opening in the tech space. Sure, he has Lovefrom and io, but Ive and his team have yet to build anything. Until we see an actual product, there’s no reason to assume that Apple needs to be shaking in its boots.
That notwithstanding, the excitement is real. Especially with Sam Altman noting that their first device will be a “crazy, ambitious thing to make,” I, too, am eager to see what this partnership churns out. But until we see what that is, the hype train is just that — hype.
There’s no denying that Apple is behind in the AI race. But I think people are overestimating AI in and of itself as it pertains to smartphone sales. So long as people can access the latest and greatest in AI improvements from their iPhone, Apple will still be able to make a killing selling incredibly profitable hardware.