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OpenAI, Jony Ive & the Art of the Deal
My phone has been pinging non-stop since yesterday. Everyone wants to know the backstory of the biggest acquihire in Silicon Valley history: Sam Altman’s OpenAI buying Jony Ive’s io Products for $6.5 billion. I have a few more clues. It’s why I’m updating my piece on the deal from yesterday.
In their video announcing the deal Ive and Altman, in round about ways, talk about a device that sits between the laptop and the phone – a third device, that we carry everywhere. The reason they are talking about a “device” in abstract terms is because more likely there isn’t “a device.” What I have learned is that there are a few prototypes. They are nowhere close to being in production. And it will be a while before we see anything materialize.
Since the news broke, a Taiwan-based analyst who specializes in supply-chain rumors related to Apple has said that the device is likely to come out in 2027. He offered details from a logistics standpoint. He doesn’t say what the device is. I wonder if 2027 is an optimistic estimate for shipping this new device.
Why?
When you look at Ive’s co-founders on io Products, you can see that they are all design-first people with wonderful skills in mechanical and physical aspects of the devices. Scott Cannon worked on Mac and iPad. Evans Hankey was key part on the Apple design team. Tang Tan led iPhone design. From a design and mechanical expertise standpoint, they are as good as it gets. It is reasonable to expect that the team would need to grow to add more senior savants with a technology stack expertise. Ask anyone involved with hardware, and they will tell you that the chasm between prototypes and production is as wide as the Grand Canyon.
No matter when the mythical device materializes, the deal (or rather the news of the deal) solves the more immediate issues. The word on the grapevine has been that Ive’s operations were burning a lot of money. Not surprising! Those former Apple all stars that walk the corridors don’t come cheap. Prototypes cost money. It was time for deeper pockets to take over.
Ive and Altman were trying to raise money from Softbank’s Masayoshi Son. Financial Times put the number at a billion. I wonder why that deal didn’t happen, given Masa loves big splashy deals with bold faced names. Maybe Masa balked at the size of the secondary, or maybe he too felt that it is better for OpenAI’s valuation to have Jony in-house. I mean he helped lead a $40 billion investment in OpenAI at a valuation of $300 billion.
If this acquisition boosts OpenAI’s valuation, it is good for Masa. SoftBank shareholders would be more than happy to ignore the gulp-inducing investment in the company. And it doesn’t cost anything. The all-stock deal despite the big ticket price is still a paper deal. I quaffed at the terms when I heard about them. I am keeping them to myself, because I have not been able to verify the information yet.
But I can bet you, that we will see OpenAI’s valuation balloon even more. What is that valuation, it is anyone’s guess. The pot of gold awaits the company in the Middle East. I wouldn’t be surprised that OpenAI eventually becomes the first privately owned company to race pass the trillion dollar valuation.
No one does valuation games better than Silicon Valley. Right!
May 22. 2025. San Francisco
2 thoughts on this post
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The issue for this device is the same as it was for the Humane AI Pin: if this device must talk to a mobile phone to be functional, then why can’t this device simply be an app on a mobile phone? Or a smart watch? The device would make some sense if it were intended to replace mobile phones, which would be a long shot. But as a satellite of a mobile phone, it would be ripe for being made obsolete by apps. Either they have become too deluded by their own design aesthetic to see the issue or the supply-chain analyst has something fundamentally wrong.
Jim
I think the whole world has gotten swayed by the notion that because it is Jony Ive, it must be magic. I have not bought into that line of thinking. Most importantly, at this point there is no device so not even worth speculating. And even when it comes, let’s say two years from now, the world just might be entirely different. The whole thing reminds me of what rude people call a circle jerk.