Another reason Buffett’s Apple share sale was well timed
Tech ‘bros’ are buzzing with the news that Sir Jony Ive, the hardware design genius behind Apple’s iconic iPhone, iPod, and Mac, has sold his startup, io, to OpenAI, the powerhouse behind the Artificial Intelligence (AI) chatbot, ChatGPT. OpenAI, with a US$300 billion valuation, has acquired Ive’s 2019 startup for US$5 billion in stock, valuing the company at nearly US$6.5 billion. Io’s 55 employees will join OpenAI and form a new hardware division to be led by OpenAI’s Peter Welinder.
This move, set to close in the summer of 2025, places Ive and his team at the helm of OpenAI’s new hardware division, tasked with crafting a “family of AI-native devices” that could redefine how we interact with technology, the internet and each other.
As someone who’s watched Apple’s rise to global dominance since 2010 (see here), I can’t help but wonder: What does this mean for the iPhone’s reign, and is Apple’s leadership sweating in Cupertino?
Ive’s departure from Apple in 2019 to found LoveFrom, his independent design consultancy, was a quiet tremor in the tech landscape. His work with Steve Jobs had transformed Apple from a struggling company into a cultural and financial juggernaut, with products that married form and function in ways that captivated the world. Now, his alliance with OpenAI’s Sam Altman feels like an earthquake. Altman’s enthusiasm is palpable – he called Ive “the greatest designer in the world” in a post on X, hinting at their shared ambition to “completely re-imagine what it means to use a computer.” The first fruits of this partnership are slated for reveal in 2026.
What strikes me most is the context of this move. AI has evolved at a breakneck pace, with systems now capable of seeing, thinking, and understanding language in ways that feel almost human. Yet, we’re still tethered to keyboards and touchscreens – interfaces designed for a pre-AI era.
What if this disconnect is a gaping opportunity? OpenAI, Altman, and Ive may be the team that helps us find out.
Ive’s decades of experience crafting consumer electronics at scale give him, and now OpenAI, a unique edge. The ability to blend aesthetics, usability, and manufacturing precision could help OpenAI create devices that make AI feel intuitive and seamless.
Last night, my son, who lives overseas, sent me a Point-of-view (POV) of his Apple Virtual Reality (VR) goggles in use. Could we look back at this leading technology in the years to come and consider it clunky? Imagine a device where voice, gesture, or even contextual awareness replaces the awkward tap-and-type interactions we rely on today. The question for investors in Apple is: Could this be the “ChatGPT phone” that outsmarts the iPhone?
Apple’s share price fall of five per cent in five days (19 May – 23 May), versus the 1.46 per cent fall for the S&P 500 and the 1.19 per cent decline for the Nasdaq, suggests investors are nervous.
The company’s stock dipped over two per cent after the announcement, indicating that investors sense a threat. Apple’s AI efforts, particularly Siri, have lagged competitors like ChatGPT. It is widely accepted in tech circles that Apple has fallen behind in the AI race. Ive’s move to OpenAI feels like a pointed critique of Apple’s current trajectory under Tim Cook, who reportedly showed little interest in Ive’s design studio after taking the helm
So, what exactly is at stake for Apple? The iPhone remains a cultural and commercial titan, but its dominance isn’t unassailable. OpenAI’s new focus on AI-native hardware – devices built from the ground up to leverage advanced language models and multimodal AI – could disrupt the smartphone paradigm. Unlike Apple or Meta, which adapt existing device categories like phones or headsets, OpenAI is reported to be aiming for something entirely new. Ive’s track record and the price paid for his business suggests he’s not aiming to build a me-too product. His designs at Apple weren’t just functional; they were aspirational, sparking joy and wonder. If he brings that same magic to OpenAI, the result could be a device that makes the iPhone feel like a relic.
While the iPhone’s design is iconic, it hasn’t seen a radical overhaul in years. And now AI is reshaping what users expect from technology. If OpenAI delivers a device that feels more natural, more integrated into daily life, Apple could lose its grip on the cultural zeitgeist. The idea of a post-iPhone world feels distant but inevitable, and this latest development places it on the visible horizon.
Of course, Apple won’t be standing still. The company has the resources, talent, and brand loyalty to fight back. But without Ive’s vision, the question now is whether Apple can match the creative spark that OpenAI appears to be now endowed with. Indeed, Altman’s optimism about creating tools that “elevate humanity” mirrors the ethos that once defined Apple. If OpenAI nails this, they could carve out a significant chunk of Apple’s market share (and other smartphone makers for that matter).
This may not be the end for Apple, but it feels like the end of an era of unchallenged dominance. In the words of Winston Churchill, this could be “the end of the beginning” for the iPhone’s reign. What comes next? Only time – and Jony Ive – will tell.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
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