OpenAI Unites with I Phone
Designer 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
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 all-stock 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
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 all-stock 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 and researchers. LoveFrom 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
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 deal is subject to regulatory
approval.
(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 the
Apple 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.
Two
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 being led not 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.