In a move that could reshape the tech industry, OpenAI has acquired Jony Ive’s hardware startup, io, for a staggering $6.5 billion. While it may seem like an expensive acquisition, this strategic decision isn’t about flashy gadgets but survival in the high-stakes generative AI arms race.
Behind the scenes, distribution has become the real battleground in AI. The era of AI supremacy based purely on model performance is fading fast. With top-tier models like OpenAI’s GPT-4o and Google’s Gemini reaching parity in capability, what matters now is getting AI into the hands of billions.
That’s where Jony Ive, the legendary designer behind the iPhone, iPad, and Apple Watch, comes in.
Why Distribution Is the New AI Gold
OpenAI’s CEO, Sam Altman, understands a harsh reality: Without direct access to users, OpenAI’s models risk becoming just another background API. Right now, Apple, Google, and Meta control the main distribution pipelines — phones, browsers, app stores, and voice assistants.
Take Apple, for instance. It charges up to 30% in App Store fees and receives $20 billion annually from Google just to keep Google Search the default on iOS devices. This kind of middleman tax is what Altman wants to escape.
By teaming up with Ive, Altman is planning something radical: building custom AI hardware that bypasses traditional gatekeepers.
He didn’t just leave Apple to tinker with gadgets. Jony Ive’s io was built from the ground up to design AI-native hardware — wearable devices, ambient assistants, and form factors we haven’t even imagined yet.
This isn’t about replacing smartphones but reimagining how we interact with AI. From smart glasses with built-in chatbots to AI clips that attach to clothing, the future of AI is ambient, always-on, and deeply personal.
As Sam Altman and Ive said in their joint announcement:
“It became clear that our ambitions to develop, engineer and manufacture a new family of products demanded an entirely new company.”
In other words, they’re not just making a product but building a platform.
Fighting Google’s Distribution Empire
OpenAI’s move is also a direct response to Google’s massive AI rollout at its 2025 IO conference. Google is integrating Gemini AI across 3 billion Android devices, millions of Chromebooks and Pixels, Chrome browser, and now even Search itself, reaching over a billion users daily.
This is a distribution powerhouse that OpenAI can’t match with software alone. Hence, the $6.5 billion hardware play.
Distribution = Data = Better AI
Here’s the clincher: the more users you have, the more data you collect. That data powers fine-tuning, training, and personalization, creating a flywheel of AI improvement. As Larry Page once said, the key test for any tech product is whether people use it twice a day, like a toothbrush.
Controlling its own hardware—and thus its own user base—is no longer optional; it’s essential for OpenAI to win.
