OpenAI’s decision to buy Jony Ive’s gadget company, io, is about distribution.
Even Google pays Apple roughly $20 billion a year to have its search engine distributed on iPhones and other Apple gadgets.
This quote stood out to me in the OpenAI announcement about the deal with Ive and his io company.
io vs IO I’m writing this from Google IO, the internet giant’s annual conference.
Well, AI products only really get better when a lot of people use them regularly.
The objective of OpenAI’s acquisition of io, Jony Ive’s gadget company, is distribution.
The race for generative AI has advanced to a new phase. The goal was to develop the best AI models in the past, but these days, they are all essentially the same.
Distribution will ultimately determine the winner more so than the caliber of the underlying technology.
What matters most is getting ChatGPT and other OpenAI models and products into users’ hands. It will be more expensive to get the offerings to customers indirectly or these products won’t be used as much without that direct relationship.
I created the iPhone, Apple’s most effective technological distribution tool. After that, he went to work on io, a new kind of device company created for the AI era.
AI might lead to a surge in new devices.
Generative AI has the potential to change the dominance of phones. All of us may have AI chatbots integrated into our smart glasses. This is something that Google, Apple, Meta, and others are working on. We could wear a small clip device to our shirts that would allow us to communicate with chatbots and AI models continuously. In this new era, who knows what else might be effective?
In any case, if you’re Sam Altman overseeing OpenAI, you don’t want Apple, Google, or Meta to get in the way of your users. As a result, you are forced to pay for distribution. Apple’s mobile device platform charges developers a hefty 30 percent fee, which is why Mark Zuckerberg hates being an app on it. For the distribution of its search engine on iPhones and other Apple devices, Google even pays Apple about $20 billion annually.
Does Altman want to give Tim Cook 30 percent of the money OpenAI makes from ChatGPT paid apps on iPhones? Of course not. Does he want to pay Apple $20 billion in a few years?
Hiring the original iPhone designer to create OpenAI’s own devices is one way to solve the problem. I was particularly struck by this quote when OpenAI announced the agreement with Ive and his io company.
Altman and Ive wrote: “It became evident that our aspirations to design, engineer, and produce a new family of products required a completely new company.”.
It may be less expensive than paying other tech giants for distribution, even if this hardware journey costs billions of dollars. Additionally, you have direct control over your own destiny and can interact directly with users.
IO versus Io.
This post is being written from Google IO, the annual conference of the internet behemoth. Altman enjoys showing up late to parties. He is doing it once more today, just as he did last year. Because Ive’s device company is called io, it’s even more ideal.
Based on my understanding of this party-crashing, Altman may be quite concerned about Google.
Google is an expert at distribution, and it’s doing everything it can to get its new AI tools and products into as many hands as possible, even with that very costly deal with Apple. These are the products that directly rival ChatGPT.
From this week at Google IO to all of Google’s work over the last 20 years or so, here are some examples of Google’s distribution power. A startup such as OpenAI must find this terrifying.
More than 3 billion devices are compatible with Android, Google’s mobile operating system. As many Android devices as possible are prominently showcasing the company’s Gemini AI chatbot service.
Millions of Chromebooks and Pixel devices are in use today. Google is integrating Gemini into a lot of these laptops and phones, and guess what?
Google technology is primarily distributed to users directly through Chromebooks, Android, and Pixel. These Google devices come with Chrome as the default browser. Google demonstrated this week at IO how Gemini is now integrated into the Chrome browser. Gemini will be viewed by over 1 billion users each day, and they may choose to use this chatbot instead of ChatGPT.
Google Search is the next big thing. The company disclosed multiple ways that Search will incorporate its new AI technology. A new AI mode was introduced on Tuesday throughout the United States. Suddenly, about 250 million people will see AI Mode and most likely use it on a regular basis. because it is prominently displayed at the top of the search page. Google Search is used by roughly 1 in 5 billion people every day.
This kind of distribution power is unthinkable for startups. Jony Ive’s new devices, along with a variety of other distribution methods, are crucial if OpenAI is to compete with the tech giants.
Data = distribution = improved AI.
What makes this so crucial? Well, AI products only truly improve when they are used frequently by large numbers of people. Larry Page, a cofounder of Google, used to refer to this as the “brushbrush test”: If your product isn’t used twice a day, don’t bother with it.
If that occurs, AI firms will be able to gather vast amounts of data about user behavior. Product upgrades are based on that data. However, in the age of generative AI, this data is also extremely valuable for creating new AI models and associated products. Users with specific permissions can use this data to train new models. Other AI development methods and fine-tuning can also be done with it.
It’s better to have more. Once more, distribution is necessary for this data feedback loop to function—massive distribution.
