OpenAI Management Crisis, Cell Phone App AI General Device Expansion, ‘$6.5 Billion’ Source Unknown

 

OpenAI Management Crisis, Cell Phone App AI General Device Expansion, ‘$6.5 Billion’ Source Unknown

 

OpenAI, in the midst of a management crisis due to financial pressure, announced an investment of $6.5 billion to expand artificial intelligence (AI) technology trapped in cell phone apps to everyday devices, but did not disclose the source of the funding.

Sam Altman, CEO of OpenAI, the world’s leading AI research institute, avoided answering the source of the funding at a press conference on the 21st for the $6.5 billion payment to acquire IO, a one-year-old startup founded by former Apple CEO Jony Ive who designed the iPhone. 

The New York Times reported on the 21st that the stock deal, which effectively unites Silicon Valley royalty, is intended to open up what the two call a “new product line” for the era of artificial general intelligence (AGI), and that “after efforts to move AI, which has remained the domain of mobile apps, to other devices have failed, AI research lab OpenAI is trying to solve that puzzle.”

 

The failure of the Humane Ai Pin, a futuristic wearable device powered by AI that attempted to separate AI from mobile phones, in April of last year has opened up a huge capital game for AI, which has not been easily separated from mobile apps, to be used in everyday life.

The 55 engineers and researchers from IO, who will join OpenAI in its largest investment acquisition, will assume creative and design responsibilities across OpenAI and build hardware that helps people better interact with technology, the NYT reported.

 

If the joint venture is successful, future devices like pendants and glasses that use AI in what’s known as “ambient computing” could be able to process the world in real time, answer questions, and seamlessly analyze images and sounds, rather than having to type or take pictures on a smartphone.

If they fail, it would be a repeat of what happened with Humain’s Ai Pin, which was designed to be a rip-off of the phone, when a senior software engineer was fired after questioning the product despite warnings about “low battery life and power consumption,” and others left because of their discontent.

 

At the height of the AI ​​boom, when the company had 250 employees and encouraged employees to provide feedback, the company said it had lost senior staff and the new device was met with negative reviews after its launch.

 

OpenAI CEO Altman folded the company shortly after the startup’s failed product.

 

OpenAI, which launched its ChatGPT chatbot in late 2022, has become one of the world's most valuable private companies, having completed a $40 billion funding round in March of this year, giving it a valuation of $300 billion. The funding round was led by Japanese conglomerate SoftBank.

 

OpenAI's rapid growth has been accompanied by repeated adoption of new corporate structures and crises.

It is a nonprofit organization established in 2015 as the parent company of AI Research Institute, but is attempting to reorganize itself as a for-profit company to make it easier to raise funds from investors.

The New York Times reported on OpenAI's management crisis, saying, "If it doesn't restructure by the end of the year, SoftBank could cut its investment in the company by half," adding, "That makes the billions OpenAI is paying to acquire IO, a one-year-old startup founded by Jony Ive, a huge expense, especially since the startup is unprofitable."

 

Building the technology that powers ChatGPT and other services is incredibly expensive, and OpenAI is under pressure to drive more near-term revenue.

The Times independently reviewed OpenAI’s financial documents, which found that “OpenAI is projecting revenue of about $3.7 billion this year and about $11.6 billion next year,” and that “the company is in talks to acquire Windsurf, an AI-based programming tool, for about $3 billion.”

 

When asked by reporters how OpenAI would fund the acquisition of IO, Altman responded that “the press is more concerned about OpenAI’s finances and revenue than the company itself,” and that “we’ll be fine. Thank you for your concern.”

Appearing at a joint press conference, Jony Ive, the intended buyer, told reporters that “this partnership is driven not by financial obligation but by a desire to create products that are ‘good for humanity,’” and that “everything I’ve done in my career has led to this point.”

 

The deal, the Times reported, was “a product of Ive’s interest in artificial intelligence, a protégé of Apple founder Steve Jobs who designed the iPod and many other products,” according to Ive’s testimony.

Ive told reporters that after leaving Apple in 2019, one of his 21-year-old twin sons, Charlie Ive, told him about ChatGPT two years ago, and curious about his son’s excitement about chatbots, Ive contacted Altman, and they became friends.

 

Ive told reporters that he was “fascinated by the technology” and founded IO last year with a number of colleagues to conceptualize new hardware products suited to AI. “It became clear early this year that I wanted to form a partnership with Altman to develop a new generation of devices,” he said.