Sam Altman wants to put ChatGPT in your pocket, and not just as an app. OpenAI has agreed to acquire the AI hardware startup founded by former Apple design chief Jony Ive in a deal valued at roughly $6.5 billion, Bloomberg reported in May 2025. The goal: build physical devices around ChatGPT from scratch, bypassing the app-store model that has defined smartphones since 2008. But before a single prototype has surfaced publicly, a federal trademark lawsuit has already forced OpenAI to pull promotional materials tied to the venture, injecting legal uncertainty into the company’s most ambitious product bet yet.
The deal and the vision behind it
In a joint letter published on OpenAI’s website, Altman and Ive announced the creation of a hardware entity called io. The letter describes plans to build “an entirely new” class of hardware and states that io’s team would merge with OpenAI to work “more intimately” with its research, engineering, and product groups. It offers no product categories, form factors, or release windows.
Axios reported that io’s staff would form a new hardware division within OpenAI and that the company expects to show its first products from the venture in 2026. Altman echoed that timeline in public remarks around the announcement.
The framing, however, contains a tension worth noting. The joint letter calls io “an entirely new hardware company,” while reporting describes it as a division inside OpenAI. Those are different organizational outcomes. A standalone company implies independent governance, its own branding, and a separate product roadmap. A division implies shared resources, tighter integration, and direct oversight from Altman’s leadership. The distinction matters for talent recruitment, investor expectations, and how quickly hardware could reach consumers.
The $6.5 billion price tag, reported by Bloomberg and corroborated by outlets including the Financial Times, has not been confirmed through SEC filings or any public purchase agreement. Until regulatory documents surface, the figure remains a well-sourced estimate rather than a settled fact.
A trademark fight is already creating friction
The most concrete, independently verifiable development so far is not a product reveal. It is a lawsuit. On June 9, 2025, IYO, Inc. filed a trademark complaint against IO Products, Inc. and others in the United States District Court for the Northern District of California. A court order followed swiftly, and OpenAI removed promotional materials connected to the io venture as a direct result. Both TechCrunch and the Associated Press independently confirmed the takedown; OpenAI’s announcement page displayed a notice stating it was temporarily down due to the court order.
The case is active and publicly docketed. If the court sustains IYO’s complaint, OpenAI could be forced to rename the hardware venture, redesign marketing materials, and rebuild consumer awareness under a different identity before any product ships. A rebrand at this stage would be far cheaper than one after launch, but it would still consume time and executive attention during a period when OpenAI is trying to establish credibility against Apple, Samsung, and Google.
There is also a perception problem. A high-profile naming fight can signal disorganization, even if the underlying engineering work is on track. For an effort that depends on attracting top hardware talent and persuading component suppliers to prioritize an unproven product line, that kind of impression carries real cost.
The AI hardware graveyard looms large
OpenAI is not the first company to pitch an AI-first device as a smartphone replacement. Humane launched its Ai Pin in early 2024 with similar rhetoric about moving beyond apps. It sold poorly, drew harsh reviews for sluggish performance and limited functionality, and the company explored a sale within months. Rabbit’s R1 handheld, also released in 2024, generated initial buzz but was widely criticized as a device that did less than the phone already in users’ pockets.
Both products shared a core problem: they asked consumers to carry a second device without offering a compelling reason to leave the smartphone behind. The app ecosystem, for all its friction, delivers payments, navigation, messaging, cameras, and thousands of specialized tools through a single object people already own.
OpenAI’s bet differs in at least two significant ways. First, it has Jony Ive, the designer who shaped the iPhone, iPad, and Apple Watch and who understands mass-market hardware at a level Humane and Rabbit never demonstrated. Second, ChatGPT’s underlying models are substantially more capable than the AI systems those earlier devices relied on, particularly after OpenAI’s rapid advances through 2024 and 2025. Whether those advantages are enough to overcome the structural challenge of displacing the smartphone remains an open question.
What would an AI-first device actually need to do?
The headline premise, that ChatGPT could become “the new phone,” demands scrutiny. A device that replaces the smartphone would need to handle cellular connectivity, camera functionality, mobile payments, privacy controls, emergency calling, and integration with the services people depend on daily. None of those capabilities have been confirmed, demonstrated, or even described by OpenAI.
No direct statements from app developers, wireless carriers, or component manufacturers have emerged to address how an AI-first device would plug into the existing infrastructure. Without carrier deals, supply chain commitments, or a developer ecosystem strategy, the notion of replacing the smartphone is a narrative built on ambition rather than disclosed engineering.
That does not make the project implausible. Early-stage hardware programs are routinely secretive, and consumer-facing details typically emerge only when companies are confident they can hit manufacturing and regulatory milestones. Apple itself revealed almost nothing about the original iPhone until January 2007, roughly two and a half years after internal development began. But it does mean that sweeping claims about “the end of apps” should be understood as aspirational framing, not a product announcement.
The corporate context adds scale
OpenAI’s hardware push is happening alongside a broader corporate transformation. The company has been converting from a nonprofit structure to a for-profit entity and closed a funding round of approximately $40 billion in 2025, giving it a war chest that dwarfs what any previous AI hardware startup could access. That financial backing makes a serious hardware effort feasible in a way it would not be for a smaller company, but it also raises the stakes. Investors who contributed to that round will expect returns, and a multibillion-dollar acquisition of a pre-product hardware venture is a significant allocation of capital.
For consumers, the practical takeaway as of June 2025 is patience. Until OpenAI shows working hardware, demonstrates how ChatGPT integrates with connectivity and daily-use features, and clarifies io’s organizational structure, the safest stance is to treat this as a high-profile experiment backed by extraordinary resources.
Where the real signals will come from
The next meaningful developments will not come from corporate letters or press interviews. They will come from the federal court docket, which will reveal whether OpenAI can keep the io name; from regulatory filings, which will confirm deal terms and corporate structure; and eventually from supply chain reports and FCC filings that would indicate a physical product is approaching production.
For now, the io story sits at a genuinely unusual intersection: a cutting-edge AI company trying to become a hardware player, guided by the designer most synonymous with the modern smartphone, funded at a scale no AI device startup has ever reached, and constrained by a trademark fight over the very name it wants to use. How those forces resolve will determine whether OpenAI can extend its influence from software into the physical objects people carry every day, or whether this becomes the most expensive entry in the AI hardware graveyard.
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*This article was researched with the help of AI, with human editors creating the final content.
