Report: Essential Cancels Second Phone, May Put Itself Up for Sale

Report: Essential Cancels Second Phone, May Put Itself Up for Sale

Andy Rubin is famous in the technology community for founding Android and then running it as a division of Google for several years after the 2005 acquisition. Android has become the largest computing platform on Earth, and everyone was curious what Rubin would do after leaving Google. We got our answer last year when Essential launched the Essential Phone. It had a striking design and support for wireless accessories, but a new report claims things are not going well for the startup. Rubin is reportedly looking to sell the company and has ended development on Essential’s next phone.

The Essential Phone was the first on the market with a display notch, which is now all the rage since Apple adopted it on the iPhone X. That got the device plenty of attention, but the only carrier to sell the phone directly was Sprint. For everyone else, the device was priced at a whopping $700 when it launched almost exactly one year ago. Faced with early software bugs and terrible camera performance, Essential eventually dropped the phone’s price to just $500 in October 2017.

Essential has never released any sales figures, but it would seem the price drop didn’t help it move units. The company is funded with venture capital to the tune of $300 million, with Amazon, Tencent, and Redpoint Ventures holding sizable stakes. Rubin has reportedly hired finance firm Credit Suisse Group AG to consult on a potential sale of Essential after it spent at least $100 million to develop its first phone. If sales are poor enough, Essential might not be able to get more funding to support another phone launch.

According to sources inside the company, discussions are focused on unloading the entire firm along with its patent portfolio. Last year, it was valued around $1 billion in advance of the Essential Phone launch. In the meantime, Essential has allegedly canceled development of a second phone. That allowed the company to divert resources to an upcoming smart home product — something Essential announced last year, but never delivered.

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 (@Arubin) May 24, 2018

Rubin Tweeted a vague statement about the company’s future, saying that “we embrace canceling” some products in order to focus on others. He says Essential is focusing on mobile and home products, but does not address the rumors of a sale. Everyone wants to know if Essential is making another phone. No one at the company is offering any clear answers.

Whatever is happening at Essential, it’s safe to say things are not going as planned.