OpenAI just spent $6.4 billion acquiring io, Jony Ive's nascent hardware venture. As someone who grew up idolizing the Jobs-Ive partnership—Mac Addict subscription, Marathon on shareware, one of everything they ever made—I understand the allure. But this move reveals OpenAI's existential crisis: they're playing a game they've already lost.

The Distribution Kings Have Already Won

Let's be clear about the consumer AI endgame: Google and Apple will dominate, with Microsoft trailing on desktop and maybe, eventually, phones. They have what OpenAI desperately lacks: hardware expertise, distribution channels, and capital scale that dwarfs even OpenAI's eye-watering funding rounds.

Hardware isn't just another moat—it's a moat where your competitors have decades of experience and you're learning to swim. Leaning into your weakness is how you get your head chopped off by companies that do this in their sleep. Apple ships hundreds of millions of devices annually. Google's Android runs on billions. OpenAI is acquiring a company that's never shipped anything.

The Roads Not Taken

There are paths OpenAI could pursue but won't. NSFW applications. Deep companionship that pushes beyond its sanitized ChatGPT. Autonomous agents that live in Discord servers, slide into iMessages, become actual digital beings inhabiting the internet. But they won't touch these opportunities—too hard to monetize, too dependent on competitors' platforms, too scary to contemplate the distribution possibilities.

These niches are ripe for smaller, higher-risk players, especially in open source. While OpenAI chases Apple's shadow, scrappy teams are building the AI experiences people actually want but can't get from buttoned-up corporate platforms.

The Burning Platform

Instead, OpenAI is stuck in a brutal position. They're desperately driving traffic to their website. Building an app that needs Siri's permission to exist. Pouring money onto the fire just to keep pace with competitors who can afford to burn cash indefinitely. Google and Anthropic match their capabilities while Microsoft—their supposed partner—hedges every bet.