OpenAI Expands Into Hardware: Speakers and Wearables

OpenAI is building AI hardware including a smart speaker. Investors eye claude ai stock and Anthropic as competition intensifies in the AI device market.

OpenAI is building hardware. The ChatGPT maker has quietly assembled a team of former Apple, Nest, and Meta engineers to develop AI-powered devices, including a smart speaker and wearable products, according to three people familiar with the project. The move puts OpenAI in direct competition with Amazon's Alexa, Apple's Siri, and Google's Assistant — and raises the stakes in an increasingly crowded field where even claude ai stock watchers are tracking every strategic pivot by rival labs.

The hardware push represents a dramatic expansion beyond the software and API business that generated an estimated $3.4 billion in annual revenue for OpenAI in 2025. Sources told The Information and Bloomberg that the company has been prototyping devices since late 2024, with former Apple executive Jony Ive reportedly consulting on industrial design. OpenAI CEO Sam Altman has reportedly told investors that he sees dedicated AI hardware as essential to delivering experiences that smartphones can't match.

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Why Hardware, Why Now?

OpenAI's timing isn't accidental. The company has watched its models become commodities — Claude, Gemini, and Llama all offer comparable performance on most tasks. Meanwhile, Apple Intelligence and Samsung's Galaxy AI have tightened their grip on how consumers actually access AI day-to-day. Altman wants a direct line to users that doesn't depend on app stores or partnerships.

The smart speaker market looks ripe for disruption. Amazon has shipped over 500 million Alexa-enabled devices, but the division reportedly lost $10 billion between 2017 and 2021 and remains unprofitable. Apple's HomePod never gained serious traction, capturing less than 5% of the global smart speaker market. Consumers use these devices for timers and weather — not the complex reasoning tasks where GPT-4o and its successors excel.

"The problem with current smart speakers isn't the AI quality, it's the form factor and interaction model. OpenAI believes they can build something people actually want to have conversations with." — Mark Gurman, Bloomberg

Wearables present a different challenge. Meta's Ray-Ban smart glasses have sold over 2 million units since late 2023, proving consumers will wear cameras and microphones on their faces if the design is right. OpenAI has reportedly explored multiple wearable form factors, including a pendant-style device and something resembling Humane's ill-fated Ai Pin — though sources emphasize the company learned from that product's $699 pricing disaster and brutal reviews.

CompanyPrimary AI Hardware2024-2025 Unit SalesKey Limitation AmazonEcho/Alexa devices~75 million annuallyNo compelling AI upgrade path AppleHomePod, AirPods, Watch~35 million HomePods total; 100M+ Watches annuallySiri remains constrained MetaRay-Ban Stories/Glasses2 million+ smart glassesLimited AI capabilities, no display HumaneAi Pin~10,000 (discontinued)Wrong form factor, poor performance OpenAISpeaker, wearable (rumored)N/A — 2026 targetUnproven manufacturing, no retail experience

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The Technical Bet: On-Device Inference

OpenAI's hardware strategy hinges on a technical problem it hasn't fully solved. Running GPT-4-class models locally requires specialized chips that don't exist yet at consumer price points. The company's custom silicon efforts, led by former Google TPU architect Richard Ho, remain 18-24 months from production according to The Verge.

So the first devices will likely use a hybrid approach: lightweight on-device processing for wake words and simple queries, cloud inference for everything else. That architecture matches what Apple and Google already deploy. OpenAI's differentiation would come from model quality — except cloud-dependent hardware has historically struggled. The original Amazon Echo worked because it did a few things reliably offline; the Humane Ai Pin failed partly because it required constant connectivity.

Altman appears undeterred. He told All-In Podcast hosts in March 2025 that "the right AI hardware doesn't look like a phone," and suggested multiple form factors would emerge for different contexts. The speaker reportedly targets home use with always-available voice interaction*; wearables would handle on-the-go queries without pulling out a screen.

But manufacturing hardware at scale requires capabilities OpenAI lacks. The company has zero experience with supply chain management, regulatory compliance for radio frequencies, or retail partnerships. Its $157 billion valuation assumes software margins near 80%; hardware typically operates below 20%.

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Competitive Pressure and Strategic Risk

Every major AI lab is watching this move. Anthropic has shown no hardware interest, focusing instead on enterprise API sales — a strategy that has investors tracking claude ai stock proxies through its major backer, Google. But if OpenAI succeeds in creating a new device category, Anthropic and others face a distribution disadvantage similar to what they already experience with mobile apps.

The risk for OpenAI is equally stark. Hardware failures have destroyed AI credibility before. Magic Leap burned through $3.5 billion before pivoting to enterprise. Essential Products, founded by Android creator Andy Rubin, shipped one phone and shut down. Even well-funded efforts from tech giants — Google Glass, Amazon's Fire Phone — became cautionary tales.

OpenAI's advantage is timing. The technology has improved dramatically since those failures. GPT-4o's 320-millisecond average response latency makes real-time conversation feasible. Multimodal capabilities — vision, audio, text — enable use cases impossible for first-generation smart speakers. And the company's $6.6 billion funding round in October 2024 provides runway for expensive hardware development.

Still, consumer hardware demands discipline that conflicts with OpenAI's research culture. The company has shipped 17 major model updates in 2024-2025; hardware requires annual or longer product cycles. Early buyers of an OpenAI speaker could find their device obsolete within months if cloud model improvements outpace local capabilities.

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What Happens Next

OpenAI hasn't publicly confirmed hardware plans, and sources disagree on timing. The Information reported a 2026 target for the smart speaker; Bloomberg suggested wearables could appear sooner as limited experiments. The company is reportedly exploring manufacturing partnerships with Foxconn and Luxshare, the same firms that assemble iPhones.

The bigger question is whether any dedicated AI hardware can succeed while smartphones improve. Apple's A18 Pro and Qualcomm's Snapdragon 8 Gen 4 already run 7-10 billion parameter models locally. By 2027, flagship phones may handle most consumer AI tasks without cloud assistance. OpenAI's window for establishing a new hardware category is narrow — perhaps 18 months before on-device phone capabilities catch up.

For investors tracking the space, including those watching claude ai stock indicators through Alphabet's performance, OpenAI's hardware bet represents either necessary vertical integration or an expensive distraction from the core API business. The company's next funding round will likely reveal which narrative wins.

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