OpenAI's $6.5B bet on Jony Ive's screenless AI device

Just a day after Google flaunted its Android XR smart glasses at I/O, OpenAI walked in and stole the entire hardware spotlight.

OpenAI confirmed a massive $6.5 billion acquisition of io, the stealth hardware startup founded by legendary former Apple design chief Jony Ive. In a leaked internal all-hands call reviewed by The Wall Street Journal, Ive and OpenAI CEO Sam Altman finally shed light on what they have been quietly cooking up.

It is not a pair of smart glasses, and it is definitely not another smartphone. Instead, Altman described a pocket-sized, contextually aware, screen-free gadget designed to live alongside your existing tech.

A screenless iPod Shuffle for the AI era

While Meta and Google are convinced that putting displays on your face is the future, Ive and Altman are taking a completely different route.

Altman told staff that the upcoming gadget is envisioned as a "third core device" that sits on your desk right after your MacBook and iPhone. It is unobtrusive, fully aware of your daily life and surroundings, and built specifically to break people away from screen addiction.

Supply chain analyst Ming-Chi Kuo added fresh color to the leak shortly after. According to Kuo, the current prototype is slightly larger than the Humane AI Pin, with an ultra-compact and elegant form factor reminiscent of the classic iPod Shuffle.

Kuo noted that the device carries cameras and microphones, connects to smartphones and PCs for computational power, and is slated for mass production in 2027. Manufacturing is reportedly slated outside of China, with Vietnam as a likely destination to sidestep geopolitical risks.

Both founders made a point to distance themselves from 2024's hardware flops like the Humane AI Pin and Rabbit R1. Ive reportedly said the project is about taking ownership of the unintended screen-addiction consequences of the iPhone, describing the venture as "a new design movement."

Altman was equally bullish, calling the venture the biggest undertaking in OpenAI history. He predicted that this new family of devices could eventually add $1 trillion in value to OpenAI, setting an eye-popping target to ship 100 million units faster than any brand-new device category in history.

Why it matters

OpenAI spending $6.5 billion on an unproven hardware startup sounds wild, but it makes total strategic sense.

As long as OpenAI lives as an app inside iOS or Android, its entire consumer business remains at the mercy of Apple and Google. To build true ambient intelligence that watches, listens, and acts on your behalf, Altman needs dedicated silicon and physical sensors out in the wild.

For regular consumers, though, we think severe skepticism is still warranted. Last year's wave of standalone AI gadgets flopped hard because voice interfaces were laggy, hallucinations were frequent, and nobody wanted to carry a second cellular plan. Ive's industrial design will undoubtedly look gorgeous, but if the device still offloads processing to your phone, it risks becoming a very expensive novelty.

For the tech industry, this draws a fascinating battle line. Meta and Google are betting that head-mounted cameras and smart frames will rule ambient computing. Ive and Altman are wagering that normal people do not want cameras strapped to their faces all day.

Convincing millions of people to buy a third core daily device is arguably the hardest product sell in modern consumer tech. If it cannot prove its utility without friction in late 2026, even Jony Ive's magic touch won't save it from the gadget graveyard.