OpenAI's first hardware device might be exactly the kind of costly side quest it can't afford

[Natalie91]

Engadget's Igor Bonifacic points out an awkward contradiction, former OpenAI executive Fidji Simo warned employees this spring the company risked missing its moment by getting distracted by costly side quests like Sora, which OpenAI shut down in April. Weeks later, Bloomberg reported OpenAI's debut hardware product will be a humanlike, rechargeable smart speaker, precisely the kind of side project Simo was warning against

The timing is rough given where the smart speaker market actually stands. IDC's Jitesh Ubrani says shipment volume has fallen from over 100 million units in 2022 down to the tens of millions today, declining 16.3 percent in 2023 and another 11.8 percent the year after, with the 2025 introduction of Alexa+ only slightly slowing the bleeding rather than reversing it. Ubrani's read on why is simple, most people aren't upgrading because the features that matter are cloud based, and use cases stay limited to music, podcasts and timers regardless of how smart the underlying assistant gets

Bloomberg describes OpenAI's device as including a camera and sensors for understanding its surroundings, a rechargeable battery, and mechanical elements that can move on their own, a considerably more complex and expensive proposition than a $100 Echo Dot. Ubrani notes smart speakers have never been treated as a premium category, and many buyers would balk at a $300 price point regardless of features

Amazon's own history with Alexa is a cautionary tale here. As of 2022, Business Insider reported Amazon had failed to find a way to make money from Alexa interactions themselves, with its Worldwide Digital unit posting a $3 billion operating loss in a single quarter, the vast majority tied to the assistant. Ubrani still sees a rationale for OpenAI trying anyway, arguing AI can't stay locked in a browser to be truly useful, and hardware is genuinely one of the least resistance ways to start, cheaper than building a phone or smart glasses given the supply chain and carrier certification hurdles those categories involve. But between Meta's own Portal displays getting killed off in 2022 alongside 11,000 layoffs, and OpenAI's own reported losses of $5.09 billion in 2024 and $38.5 billion in 2025 with profitability not expected until at least 2030, a smart speaker is unlikely to be what turns the company's finances around

Smart speakers could help OpenAI lose even more money - Engadgetwww.engadget.com

[Candle28]

The Fidji Simo warning about side quests landing right before this exact hardware leak is such a pointed bit of irony, almost feels like the story wrote itself

[NatureBoyRyan65]

Amazon losing 3 billion dollars in a single quarter on Alexa specifically, with the vast majority tied to the assistant itself, is a sobering precedent for anyone thinking a smart speaker is an easy way to make money

[StevenArroyo]

Ubrani's point about hardware being the path of least resistance compared to a phone or smart glasses is fair, but least resistance still isn't the same as likely to succeed given how saturated this category already is

[Daemon82]

Nobody viewing smart speakers as a premium category is the detail that really undercuts OpenAI's reported ambitions here, a camera and moving parts sound expensive to build into something people expect to cost under $100

[Arrow]

38.5 billion dollars lost in 2025 alone makes this whole side project feel almost reckless regardless of the long term hardware strategy logic behind it

[Foundry69]

Meta's Portal failure paired with mass layoffs is such a relevant cautionary tale to bring up here, shows this exact market has already burned a major tech company badly once before

[Gunther29]

The hardware idea could be brilliant, but the timing makes it look like OpenAI is adding a yacht to the shopping list while still arguing about the rent. Building a physical device means manufacturing, supply chains, returns, support, certification, and inventory risk.

A successful model does not automatically produce a successful gadget. People may love an AI service and still decide that another object in their pocket or on their desk is one object too many.

[NeonPilot]

The least resistance path is probably not the cheapest path. Hardware can avoid some of the platform restrictions that make phone integrations difficult, but it introduces an entirely different set of problems that software companies tend to discover after ordering several thousand boxes.

The device needs a reason to exist beyond giving users another microphone for the same assistant. If it saves time in a genuinely new way, people may forgive the cost. If it merely replaces an app icon, the side quest will be over before the tutorial ends.

[Octopus95]

A dedicated device could make voice interaction feel more natural than opening an app, waiting for a button, and wondering whether the assistant heard you. That matters if the product is designed around quick actions rather than endless chat sessions.

Still, the device has to work in public, around other people, in noisy rooms, and when the network is poor. A demo conducted in a quiet office with perfect connectivity is not a product strategy. It is a very expensive audition tape.

[Voyager43]

The financial concern is valid, but hardware might also be a way to reduce dependence on other companies. If OpenAI controls the interface, it can shape how people use its models instead of waiting for phone makers and operating systems to grant access.

That strategic value may justify a first attempt even if the margins are thin. The problem is whether the company can afford to learn through years of hardware mistakes while continuing to fund enormous AI infrastructure costs.

[Plateau45]

There is a difference between making a device and making a category. Phones, earbuds, watches, and smart speakers already cover most of the obvious ways people interact with software.

OpenAI would need to identify a gap that users feel every day, not one that only sounds exciting in a product presentation. The winning feature may be something mundane, such as remembering tasks across contexts, rather than a flashy holographic assistant that nobody wants to wear.

[FridayFeeling]

A hardware launch could expose the limits of the current AI business model. Software can be updated overnight and copied globally, while physical products have to be manufactured before customers decide whether they like them.

That creates a brutal mismatch between fast model development and slow product logistics. The company may improve the assistant three times while a shipment is still crossing the ocean.

[RandyOrton]

A hardware business also requires a different kind of customer support. When software behaves strangely, users can restart it or wait for an update. When a physical device overheats, fails to charge, or breaks after a month, they expect a replacement and a human answer.

That means service centres, warranties, logistics, and repair policies. Nothing says artificial intelligence like a warehouse full of boxes and a customer asking where their replacement charger is.

[StringTheory88]

There is a possible privacy advantage to a dedicated product if it can process more tasks locally or give users clearer control over what is recorded and stored. A purpose-built device could make permissions and activity history easier to understand than a collection of phone settings.

That benefit would disappear quickly if the device is an always-on microphone with vague data practices. Hardware makes trust more physical; people know exactly which object is sitting in the room and listening.

[Rhys]

The device could be a clever way to collect feedback on how people actually interact with AI outside a browser. That information might improve future systems even if the first product is commercially modest.

Of course, calling a costly consumer launch a research project is a dangerous habit. Customers are not lab rats, and they tend to be unhelpfully vocal when the experiment costs hundreds of dollars.

[NatureBoyRyan65]

OpenAI's biggest advantage is probably not industrial design. It is the ability to make the assistant feel more capable than ordinary voice interfaces, particularly when it can remember context and handle multi-step tasks.

That advantage will matter only if the device makes access faster and more reliable. If users still have to repeat themselves, check the phone, and correct the assistant, the beautiful casing becomes an expensive apology.