OpenAI buys io for 6.5 billion US dollars: From where and for what?

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Images of San Francisco, Chinatown, the Vesuvio, a bar where beatniks like Jack Kerouac and Allen Ginsberg used to hang out. The video is nine minutes long, in which Sam Altman and Jony Ive first walk through the streets of the Jackson Square district, which, according to a report, is partly or now entirely owned by Ive. The images border on kitsch, they seem authentic, but here and there the houses are so blurred that it could be AI or Photoshop. The protagonists settle down in the Zoetrope café to talk dreamily about their project: io and the new AI device.

In reality, OpenAI is said to have paid the hardware start-up io, run by Apple's former chief designer, 6.5 billion US dollars for the takeover. One of the big questions here is: where do the billions – come from for sums that are unimaginable to us humans outside the Valley and outside prominent spheres and outside the new OpenAI mafia? The OpenAI mafia refers to those OpenAI employees who have become self-employed with their earnings from there, like the founders of PayPal, who are also accused of mafia-like traits – without the violence, but with power and money.

AI – Whatever the cost

Altman has repeatedly said that he doesn't care what it costs in the end, he wants to achieve his goal, an AI that helps everyone, preferably an AGI (Artificial General Intelligence). Good. I wouldn't care where the money for my new interior design came from if I could conjure it up with this idea. But I can't. So where does Altman or OpenAI get 6.5 billion US dollars from? Or is it just a fictitious sum? Money on the page?

The money that OpenAI earns is barely enough to keep the AI services running. Development, employees and operating expenses swallow up more than the subscriptions have brought in so far. Just recently, Altman complained that every “please and thank you” that ChatGPT users write costs the company millions. Every word is converted into tokens and processed by the AI, which requires computing power.

So investors have to get involved. On its website, OpenAI writes that it is better to treat your investment as a donation. They are obviously aware that they won't get the big money back any time soon. The transformation into a profit-oriented company will not happen for now. So, are the investors now letting Altman spend 6.5 billion on a hardware start-up that we know very little about? Apparently, so.

Jony Ive and the iPhone moment

Jony Ive is partly responsible for the iPhone and certainly for its success, but the idea for the device came from Steve Jobs. It is well known that Ive and Altman have been working together for some time. Ive said that they wanted to develop a device that was less annoying than the iPhone. In the bromantic video, Altman sounds as if he is already using this ominous device. The two café guests are sitting at the bar when Altman says how time-consuming it would be if you wanted to ask ChatGPT about something right now: open your laptop, type, wait.

So what to do instead? The new device is due to be released next year. It would almost be a bit funny if they were to shake smart glasses out of their sleeves and make a video bohai for them. They are known to be working on the glasses. Meta and Google have already launched or presented their models on the market, and Apple is also said to be in the process of developing one.

A new Rabbit or AI Pin would be irritating. Both are devices that have already gone completely bust. They were intended to make AI functions usable as a pin or as a small additional device in a trouser pocket. Great, an additional device in my pocket that can do less than my smartphone – nobody thought of that.

How about a chip under the skin? Or in the eye? Nothing is too crazy in Silicon Valley, and Altman is already deep in the worldcoin business, the crypto-iris scanning company. But why have a head of design like Ive, if a chip like that hopefully won't protrude through the skin?

io instead of LoveFrom

And then there is the question of why a takeover is needed at all. Ive and Altman announced their collaboration a long time ago. It was actually about the design work of LoveFrom, Ive's design company based in the same block. io is supposed to be a kind of spin-off. Founded specifically to be taken over for billions?

A current iPhone costs more than 1000 euros. There are estimates that it costs about half that to manufacture. That makes a profit of 500 euros. And that doesn't include the cost of the entire development and marketing. At 500 euros, it would take 13 million devices sold to recoup the 6.5 billion. Again, – without development costs. That seems feasible. Apple sold 240 million iPhones last year. But it really needs an iPhone moment. Ive and Altman believe in it, as they both affirm for nine minutes in the video. “The coolest piece of technology he's ever seen,” says Altman. We'll see.

(emw)