OpenAI’s $6.4B All-Stock Deal with Jony Ive’s ‘io’: A “Siri_ous” Challenge for Apple Inc.
OpenAI’s Software Weds Jony Ive’s Hardware: What Will the Baby Look Like?
By Karan Bir Singh Sidhu
Retired IAS Officer, Former Special Chief Secretary (Punjab), a gold-medalist Electronics & Communication Engineering graduate, who writes on Strategic Affairs, AI, and High-Tech Developments with a focus on Industry Impact and Global Policy Implications
OpenAI Acquires Jony Ive’s ‘io’ in $6.4B Deal
The tech world witnessed a seismic shift on May 21, 2025, as OpenAI announced its $6.4 billion all-stock acquisition of Jony Ive’s AI device startup "io," stealing the thunder from Google’s I/O 2025 announcements that wrapped up the very same day. This monumental partnership fuses OpenAI’s cutting-edge artificial intelligence with the design brilliance of Apple’s legendary former Chief Design Officer. Ive—whose 27-year career at Apple ended in 2019—now embarks on a gargantuan venture poised to reshape the future of computing through elegantly crafted, AI-native hardware. Meanwhile, Apple continues to stumble on fundamentals—Siri still can’t reliably set alarms—underscoring a widening innovation gap as its former design visionary returns with a bold ambition to challenge the industry’s most entrenched players.
The Blockbuster Deal: OpenAI Acquires Jony Ive's "io"
OpenAI's acquisition of Jony Ive's hardware startup "io" represents the AI research lab's largest purchase to date, valued at approximately $6.4 billion. The all-equity deal includes OpenAI's existing 23% stake in the company. Announced via a joint blog post by OpenAI CEO Sam Altman and Jony Ive, the acquisition marks a strategic move to bring artificial intelligence into the physical world.
"Tentative ideas and explorations evolved into tangible designs," wrote Altman and Ive in their joint statement, suggesting that OpenAI's foray into hardware is no longer a distant goal but an imminent reality. Altman further emphasized the significance of the partnership on social media, calling Ive "the greatest designer in the world" and expressing enthusiasm about creating "a new generation of AI-powered computers."
Founded just a year ago, "io" has operated largely in stealth mode under Ive's leadership, alongside fellow Apple veterans Scott Cannon, Tang Tan, and Evans Hankey. This team represents an elite collection of design talent responsible for some of technology's most iconic products. As part of the deal, the io team will now merge with OpenAI's research, engineering, and product teams in San Francisco.
The Apple Alumni Network: Ive's Dream Team
Jony Ive's departure from Apple in 2019 after a 27-yea marathon innings marked the end of an era for the Cupertino giant. As Apple's Chief Design Officer, Ive was the creative force behind revolutionary products including the iPhone, iPod, iPad, MacBook Air, and Apple Watch. His design philosophy transformed Apple from a computer company into a luxury lifestyle brand with unmatched cultural influence, worldwide.
“If I had a spiritual partner at Apple, it’s Jony,” Steve Jobs had remarked in 2011. “Jony and I think up most of the products together, and then pull others in and say, ‘Hey, what do you think about this?’ He gets the big picture as well as the most infinitesimal details about each product.” This sentiment encapsulates the profound trust and creative synergy that Jobs shared with Ive — a partnership that defined Apple’s golden era.
The "io" leadership team reads like an alumni roster of Apple’s design department. Evans Hankey briefly succeeded Ive at Apple following his departure. Tang Tan led iPhone design for years. Scott Cannon supervised teams working on Mac and iPad development. This amalgamation of Apple’s crack design team now sits outside Cupertino, potentially giving OpenAI access to the pedigree and design DNA that made Apple products revolutionary on a global scale.
While Ive himself will not formally join OpenAI as an employee, his design firm LoveFrom will assume "deep creative and design responsibilities" across both OpenAI and io while remaining independent, in strict legal terms. This arrangement gives OpenAI access to Ive's vision while allowing him to maintain his creative autonomy.
Siri's Struggles: Apple's AI Achilles' Heel
As OpenAI positions itself to revolutionize AI hardware, Apple continues to struggle with basic AI functionalities, particularly with Siri. Despite being a pioneer in voice assistants when introduced in 2011, Siri has fallen behind competitors in capabilities and reliability.
User reports indicate persistent issues with Siri's ability to complete simple tasks like setting alarms or timers. Following iOS updates, many users reported Siri responding with error messages like "Uh oh, there's a problem. Please try again" when asked to set alarms. These issues appear to affect multiple device models, suggesting systematic problems rather than isolated incidents.
More broadly, Siri suffers from slowdowns in response time, decreased accuracy in understanding requests, and failures to execute basic commands. While Apple has attempted to improve Siri over the years, the assistant continues to face limitations including heavy reliance on internet connectivity and imperfect natural language understanding.
Strategic Implications: Winners and Losers
Who Gains:
OpenAI: With this acquisition, OpenAI transitions from a purely software-focused AI lab to a potential full-stack AI powerhouse capable of controlling both the intelligence and the physical form of future computing devices. Now valued at $300 billion after securing $40 billion in funding from SoftBank in March 2025, OpenAI has the resources to pursue ambitious hardware projects.
Jony Ive and the io team: The deal provides substantial validation and resources for Ive's post-Apple venture. The $6.4 billion valuation represents one of the largest acquihires in tech history for a company that hadn't yet shipped a product.
Microsoft: As a major investor in OpenAI holding a 49% stake after its $13 billion investment in 2023, Microsoft stands to benefit from OpenAI's expansion into hardware. This could complement Microsoft's own hardware efforts and strengthen its position against Apple.
Who Loses:
Apple: The loss extends beyond Ive himself to include the collective design expertise of the io team. Apple now faces potential competition from devices envisioned by the very people who created its most iconic and successful products—now empowered with AI capabilities that far surpass Siri’s limitations. Coming at a time when Apple Intelligence, after an initial surge of enthusiasm, has seen momentum wane; when its much-touted privacy credentials are increasingly under scrutiny; when regulatory and tax pressures mount in the European Union; and when Warren Buffett’s Berkshire Hathaway has begun offloading Apple stock—the latest development strikes like a bolt out of the blue. Under Tim Cook’s stewardship, Apple must now reckon with a rapidly evolving landscape shaped in part by its own alumni, it helped foster and grow.
Google: Despite its own ambitious AI announcements at I/O 2025, including Gemini 2.5 models with enhanced capabilities like "Deep Think" mode for complex reasoning, Google now faces a formidable new competitor in the AI hardware space. This comes in spite of its claims of superior performance metrics, an unmatched engineering talent pool, and one of the world’s most advanced networks of data centres. The entry of OpenAI—armed with visionary design and a hardware-first mindset—poses a strategic threat that Google can no longer ignore.
Meta (Facebook): Mark Zuckerberg’s $15B+ gamble on building a metaverse-first future through Reality Labs now confronts a philosophical and technological shift. OpenAI and Ive’s pursuit of intuitive, AI-native physical devices sidesteps the metaverse’s immersion-heavy, headset-based vision. With Reality Labs having reported $21B in losses between 2022–2023 and internal usage metrics revealing stagnation, Meta’s strategy now appears increasingly isolated. As ambient AI begins to redefine digital interaction, Meta's decade-long bet on virtual worlds risks being overtaken by a post-screen, post-avatar reality.
For Elon Musk, the development is both strategic and symbolic. As he wages legal war against OpenAI—an organization he co-founded but now accuses of abandoning its open-source, non-profit ethos—the rise of an AI-hardware powerhouse backed by Ive’s design vision only intensifies the stakes. His own AI venture, xAI, and its flagship model Grok face mounting pressure not only from technological competition but also from external shocks, including the latest Trump-era tariff escalations that have rattled Tesla stock. As OpenAI sharpens its edge with hardware integration, Musk is left balancing courtroom battles, investor jitters, and a race to stay relevant in an AI landscape he helped ignite.
Established hardware manufacturers: Traditional device makers may find themselves competing against AI-first hardware designed from the ground up for new interaction paradigms.
Apple's Potential Responses
As Tim Cook contemplates Apple's strategy in response to this development, several options emerge:
1. Accelerate existing AI partnerships
Apple has already been working with AI companies, including a partnership with Anthropic to integrate Claude Sonnet into Xcode for an AI coding assistant. Expanding these collaborations could help Apple rapidly enhance its AI capabilities while leveraging its hardware expertise.
2. Consider acquiring Anthropic
With OpenAI now firmly aligned with Microsoft and venturing into hardware, Apple might consider acquiring Anthropic, one of the few remaining independent large AI model developers. Anthropic, backed by Amazon with a $4 billion investment and Google with contributions totaling up to $2 billion, could provide Apple with a competitive foundation for next-generation AI services.
3. Overhaul Siri and accelerate Apple Intelligence
Apple launched its "Apple Intelligence" framework in 2024, but needs to dramatically improve Siri's reliability and capabilities. Basic functionalities like alarm setting need to work flawlessly before more advanced features can gain user trust. Apple should prioritize fixing these fundamental issues while simultaneously pushing forward on more ambitious AI applications.
4. Double down on Apple's integrated approach
Apple's strength has always been in controlling both hardware and software. The company could accelerate development of specialized AI hardware within its existing product lines, leveraging its chip design expertise to create devices optimized for on-device AI processing.
The Google Factor: I/O 2025 in Context
Google’s I/O 2025 developer conference—attended by our Honorary Tech Adviser, Bilawal Sidhu, in Mountain View on May 20 and 21—showcased significant AI advancements, most notably major updates to its Gemini models. The new Gemini 2.5 Pro features an “enhanced reasoning mode” called Deep Think, enabling the model to evaluate multiple hypotheses before responding—an especially powerful tool for tackling complex mathematical and coding problems.
These developments demonstrate that the AI race continues to accelerate across multiple fronts. While Google focuses on enhancing its AI models and integrating them across its services, the OpenAI-io partnership represents a different approach: creating entirely new computing paradigms built specifically for AI interaction.
Future Outlook: AI's New Physical Avatar
The OpenAI-io collaboration aims to develop products that "inspire, empower and enable," with the first offerings expected to launch in 2026. While specific products remain under wraps, reports suggest the team is exploring devices that take users beyond traditional screens, potentially including headphones and gadgets with cameras.
This vision aligns with broader industry trends toward ambient computing, where AI becomes a natural part of our environment rather than something accessed through conventional interfaces. These devices may well become the avatars of artificial intelligence—physical embodiments through which humans interact with complex digital capabilities in intuitive, seamless ways. As Chris McKay noted on LinkedIn: "When I use tools like ChatGPT and Gemini today, I often feel like my computer/phones are getting in the way... How we touch, see, and experience AI will define its impact as much as the technology itself."
Peering into Future: A New Chapter in Computing
The OpenAI-io acquisition represents more than just another tech deal—it signals a fundamental shift in how we may interact with AI in the future. For Apple, it creates both an existential challenge and an opportunity for reinvention. The company that revolutionized smartphones now faces the prospect of the post-smartphone era being designed by its former creative leader.
Tim Cook's response to this development will define Apple's position in the next computing paradigm. Meanwhile, as Jony Ive brings his design sensibilities to OpenAI's technical capabilities, we may be witnessing the birth of entirely new product categories that redefine our relationship with technology—just as the iPhone did nearly two decades ago.
The race to create AI-native hardware is now officially underway, and with Ive and OpenAI's union, the tech industry has entered uncharted territory where AI's capabilities are no longer constrained by interfaces designed for a pre-AI world.
As Bilawal Sidhu, our Honorary Tech Adviser, aptly puts it: “The classical theory of the hardware–software tradeoff holds good, in principle—but the fact is, while it helps to have proprietary software, having custom-built hardware allows you to retain a distinct edge of advantage.”
In the meantime, the message for India’s techno-bureaucrats is simple: “If you can’t beat them, join them.” The future belongs to those who can seamlessly fuse intelligence with form, and India must decide whether to observe from the sidelines or embed itself at the cutting-edge frontier.