OpenAI Finds Hardware Partner, Google Embeds Gemini in Chrome, & Perplexity is Too Late

OpenAI partners with Luxshare, a key Apple assembler, and Gemini is embedded in Chrome while Perplexity is still limiting browser access

OpenAI Partners with Apple Supplier for AI Hardware

OpenAI is accelerating their hardware ambitions by partnering with Luxshare, a key Apple assembler for iPhones and AirPods.

This was spearheaded by ex-Apple hardware chief Tang Tan, who is now OpenAI’s Chief Hardware Officer. While this is a logical next step after OpenAI acquired Jony Ive’s io Products, it must have also been a surprise, as the news sent Luxshare’s stock price up 10%.

Luxshare has been a forward-thinking company for decades. Founded by Wáng Láichūn in 2004 (known as Grace Wang in English), she put Luxshare on the map by outmaneuvering her Taiwanese rivals in winning Apple’s AirPods contract in 2017.

She won it by manufacturing them at cost. In other words, building the AirPods for free.

Why would she do this? Well that was the catch: Tim Cook had to visit her factory and be photographed on the assembly line. Sure enough, Tim Cook visited later that year.

Tim Cook visiting Luxshare with CEO Grace Wang

Wang’s photo op deal was a stroke of brilliance, changing Luxshare’s perception from one of many Apple suppliers to a real partner, and Luxshare has grown over $400 billion in valuation since then.

And now, that success is positioning Luxshare as a generative AI hardware manufacturer, thanks to their connections with Jony Ive and Tang Tan.

This is also a fantastic partner for OpenAI. While winning consumer hardware is still very hard, it has become far more critical after Judge Mehta ruled that Google could keep paying for search defaults.

We know that defaults matter, otherwise Google wouldn’t pay Apple $20 billion each year for it.

Gemini was already native in Google’s Android, and after this ruling, what’s stopping Google from paying Apple more to make Gemini native in iOS as well?

Google can credibly corner the smartphone market thanks to Judge Mehta’s ruling. Now that OpenAI faces a real risk of being boxed out of mobile, it’s becoming existential for them to blaze their own trail in hardware.

Google Integrates Gemini Directly into Chrome, Perplexity’s Comet Released Too Late

Google began rolling out Gemini AI features natively in Chrome for desktop and mobile users in the United States, offering an intelligent agent for summaries, tab-spanning comparisons, and history-based queries.

I’m sure this embed will be available for all of Chrome’s 3.5 billion users soon enough, countering Microsoft's Edge Copilot and Perplexity's Comet.

Speaking of Perplexity, this can’t be good news for their browser ambitions. They still only offer their Comet browser available for customers paying for their Max ($200/month) or Pro ($20/month) plans.

This may be a big miss in hindsight, as Comet never had a chance to scale before incumbents like Google’s Chrome and Microsoft Edge added AI features. Let’s compare the MAU counts.

• Chrome: 3.5 billion

• Edge: 300 million

• Perplexity: 22 million

But remember, Perplexity only makes this available for Max and Pro customers. Assuming all of their projected $200 million ARR comes from just Pro plans, and I know they have an awesome API that makes some money, they’re projecting at the most roughly 800k paying users. No where near enough to build a groundswell.

And time is of the essence for displacing the browser market. Microsoft’s Internet Explorer cratered thanks in part to the last paradigm shift, mobile. iOS was released in 2007, Android in 2008, and the rest is history.

So why did I say it “may” be a big miss in hindsight, despite being in a new paradigm shift with generative AI? These AI features aren’t offering enough utility. Microsoft released Copilot for Edge back in August, and the features weren’t enough to capture meaningful market share.

It’s quite likely that Perplexity was in a similar position, and even if they offered Comet to all 22 million monthly active users, it wouldn’t have been compelling enough to switch.

But this is still probably worth building towards. Consumer behavior and expectations are an incredible moat for incumbents, and your best shot for evolving them are by seizing new paradigms. Internet Explorer started losing share when mobile proliferated, and we’re entering a new paradigm with generative AI proliferating.

Perplexity recently raised $200 million, can they stay alive long enough to capture this browser opportunity, or did Google slam the door shut by embedding AI features in Chrome?

Given that their round was likely dilutive, it seems like Perplexity’s time is short, and Google just made switching away from Chrome a lot less compelling.