OpenAI's $6.5 billion acquisition of Jony Ive's design studio io Products has moved from ambitious side bet to central battleground in the fight over what OpenAI becomes next, according to new Fortune reporting on the internal and external pressure surrounding the effort. The company still expects to unveil its first hardware device in the second half of 2026, with Altman describing a family of products built around "extreme contextual awareness and proactive assistance" -- essentially, an always-on AI companion device rather than a phone-adjacent gadget.
The legal exposure escalated sharply this month: Apple sued both OpenAI and io Products directly, accusing two former Apple employees now working on the hardware effort of systematically stealing confidential data -- including unreleased hardware specifications, technical documentation, and details about Apple's supply-chain vendors and contractors. It's an unusually direct confrontation between a $4.6 trillion incumbent and a challenger explicitly building its next major product line around that incumbent's former design chief.
“The category itself carries real execution risk independent of the lawsuit.”
The category itself carries real execution risk independent of the lawsuit. AI-first hardware has a rough recent track record -- the Rabbit r1 and Humane AI Pin both launched to enormous hype and then flopped commercially within months, undercut by underwhelming functionality relative to what a smartphone already does. Ive's design pedigree buys attention, not automatic product-market fit, and OpenAI is betting a substantial chunk of its non-API roadmap on succeeding where two well-funded, well-designed predecessors failed.
What makes this more than a product story is the platform question underneath it. Apple, Meta and Google are all racing toward some version of the same "next essential device" thesis, each trying to own the layer above the smartphone before a rival does. For OpenAI specifically, succeeding here is part of the case it needs to make to IPO investors that it's a durable platform company with its own hardware distribution, not just a model provider renting distribution through Microsoft, Apple and everyone else's existing devices.
What to watch: how the Apple trade-secrets suit proceeds and whether it delays the H2 2026 device timeline, and whether OpenAI's actual product avoids the failure modes that sank the Rabbit r1 and Humane Pin.