Sam Altman’s OpenAI is betting the next big consumer interface will be an AI-powered device, and Jony Ive is helping steer that bet. In the roughly one year since OpenAI acquired Ive’s io Products for $6.5 billion, the io team has been integrated into OpenAI as the OpenAI hardware group, with Ive spearheading the project and LoveFrom setting the aesthetic and providing design services. But before any device has actually hit store shelves, Apple has thrown the whole plan into chaos with a scorched-earth lawsuit accusing OpenAI of trade secret theft.

That legal fight is the kind of problem that does not just delay shipments. It turns a hardware launch into a headline trial, complete with questions about who owns what, what was learned when, and what kind of design process OpenAI can prove it used. OpenAI’s device is expected to ship as early as next year, and it remains a mystery in many ways. A Bloomberg report citing anonymous sources described it as a home-speaker-like device that would act as an active AI companion and include moving mechanical parts designed to mimic human behavior, while a source familiar with OpenAI’s plans told Fortune that the design of the initial hardware device has been finalized and that work continues on a broader family of AI devices.

Why does this matter beyond the obvious “can they launch a gadget” question? Because OpenAI’s push into hardware is not just about selling something cool. The source explains that with the 11-year-old organization no longer the undisputed leader in large language models, hardware is framed as strategic, possibly even critical. The idea is to put OpenAI’s models into consumers’ hands, make the product itself an on-ramp to using OpenAI’s technology, and reduce the ability of competitors to cut off that user path. Even the analyst quote underlines the core challenge: hardware needs to be compelling enough to get people to actually buy it, not just admire it.

This gets harder when you consider how crowded the “AI device” race already is. OpenAI is one of several major tech companies, including Apple, Meta, and Google, racing to create the next essential tech device by fusing AI and hardware into a new class of gadget. But consumer proof is missing. The path is already littered with casualties, including highly hyped, AI-first gadgets like the Rabbit r1 and the Humane AI Pin. The Humane device, a voice-enabled AI assistant that clipped onto a user’s shirt, was created by two former Apple employees and raised $241 million in venture funding, and still flopped spectacularly on arrival. The lesson for executives is brutal: money and buzz are not a moat if the everyday experience does not deliver.

There is also the boring-but-decisive engineering reality underneath the marketing. Because of limitations in mobile operating systems and cellular connectivity, companies are trying to figure out how to package consumer AI, whether that means wearables, robots, or phones, and how to get AI to run mostly locally instead of relying entirely on outside connectivity. Privacy then becomes the entire ballgame for devices that are physically present in the home. The source calls out the risk bluntly: devices that record users in the home are among the most risky when it comes to consumer privacy. “People wonder if an AI device is recording them or not, and it’s really uncomfortable to have to ask that question,” Elena Wagenmans, co-founder and CEO of TAYA, says. TAYA’s necklace, notably, does not have an “always-on” mode and includes built-in privacy safeguards. That context matters because OpenAI’s rumored device potentially involves recording users in the home.

OpenAI’s messaging on the experience, according to the source, tries to preempt some of that fear. Altman has described early prototypes as “simple” and less distracting than a smartphone, saying you trust it over time and that it has “just this incredible contextual awareness of your whole life” in an on-stage interview alongside Ive in November 2025. But even that optimistic framing meets skepticism when you combine two things: the novelty of the device category and the uncertainty consumers will feel about privacy in a room where the device is always nearby.

Inside OpenAI, the hardware effort also has organizational complexity baked into it. In addition to the fact that Ive is not technically an OpenAI employee, the hardware group structure spans multiple teams and organizations. The hardware team, now more than 400 employees, works out of the original io building in Jackson Square, while OpenAI’s headquarters in San Francisco’s Mission Bay is across town. Ive is collaborating with the hardware team, while still leading his standalone design firm, LoveFrom, and setting the aesthetic for OpenAI’s family of devices. That structure may pull in world-class mechanical engineering and industrial design talent, but it also creates risks of clashing visions and cultures, as well as challenges in overall efficiency. Former colleagues describe Ive as laser-focused and having high expectations, with a reputation for shielding teams from internal pressures like cost and timelines.

So the question now is not just whether OpenAI can design and ship a compelling AI companion device. It is whether it can do it while defending its process publicly in court, earning trust in a privacy-sensitive category, and delivering something consumers want enough to replace habits. For Altman, the stakes are amplified by competitive pressure and internal governance concerns: he was briefly fired in 2023 for not being “consistently candid” with the company’s board of directors, and a lengthy New Yorker article this year raised questions about his trustworthiness. And as OpenAI prepares for an initial public offering, hardware becomes a double-edged sword: a potential path to deeper user lock-in, but also a higher-visibility risk that could turn a product rollout into a referendum on the company’s judgment. For executives watching OpenAI from the sidelines, the real takeaway is that hardware is no longer just a product bet. It is a strategy, a trust test, and, now, a legal battlefield all at once.