Essential Products, the company co-founded by Android creator Andy Rubin, has reportedly canceled development of its next smartphone and is considering to sell itself. The company debuted its first smartphone named Essential PH-1 amid a lot of fanfare but IDC estimates it to have sold fewer than 90,000 units in its first six months. Also Read - OnePlus Co-founder Carl Pei's Nothing startup acquires Essential smartphone brandAlso Read - Essential Phone PH-1 gets February 2020 security patch
Bloomberg reports that the startup has hired Credit Suisse Group AG to advise on the potential sale and has even received interest from at least one suitor. Essential is part of Rubin’s incubator named Playground Global and according to Crunchbase, it has raised about $330 million so far. The company was started with $30 million from Playground Global and received another $300 million in a round of funding participated by several investors including Amazon Alexa Fund, Tencent Holdings and Redpoint Ventures. The startup was valued at $900 million and $1 billion around a year ago. Also Read - Essential Phone PH-1 gets January 2020 security patch and audio improvements
Essential has also received investments from Hon Hai Precision Industry Co, the contract manufacturer popularly known as Foxconn, which is also its manufacturing partner for Essential PH-1 introduced last year. Bloomberg estimates Essential to have spent more than $100 million on developing its first smartphone and US telecom carrier Sprint has launched a significant marketing campaign for the smartphone.
According to people familiar with Essential’s plans, the company is planning to sell the entire company including its patent portfolio, hardware products like the original Essential PH-1, upcoming smart home device and modular 360-degree camera attachment. The deal is also expected to include Essential’s engineering team which mostly includes former Apple and Google engineers.
The report adds that Essential was working on a new model but has since canceled the development of the device. It has also shifted its engineers and other resources to an upcoming smart home product, which is expected to launch sometime next year.
Essential debuted its first smartphone in August last year after several delays. It brought an edge-to-edge display design, a unique notch design for front camera, ceramic and titanium casing and near stock Android experience. It was initially priced at $699 and critics slammed it for being futuristic in terms of design and elements but failed on basics like camera performance. Since its launch, Essential has lowered the price by $200 and is said to be planning to expand it to other markets as well.
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“We always have multiple products in development at the same time and we embrace canceling some in favor of the ones we think will be bigger hits. We are putting all of our efforts towards our future, game-changing products, which include mobile and home products,” Andy Rubin tweeted after Bloomberg reported the proposed sale.
Rubin is regarded as the pioneer of Android and he started Playground Global after leaving the search giant Google in 2014. In November, he took a short leave of absence from Essential and Playground Global after reports of workplace misconduct at his previous employer emerged. Essential is now said to be exploring either an outright sale or going back into the phone business with a manufacturing partner other than Foxconn with its branding.