Essential Phone
From Invertopedia, the encyclopedia of how things fail
Essential was the phone company founded by Andy Rubin, who had led Android at Google[1]. It raised $330 million across two rounds[2] and was valued at $1 billion at one point[1]. Its only phone, the $699 PH-1, sold an estimated 88,000 units in 2017[3][5], and on February 12, 2020 the company announced it was shutting down, saying it had no clear path to ship its next phone, Project Gem[1][2].
Contents
The bet
The person who built Android could build a better Android phone than the companies that licensed it: a titanium and ceramic body, an edge-to-edge screen that wrapped around the camera, stock software and magnetic add-ons such as a 360-degree camera[3][4]. Sold unlocked for $699 and working on all major US carriers[3], it would win buyers on design and on Rubin's name.
What happened
| May 30, 2017 | Rubin unveils the Essential Phone PH-1: $699 unlocked, titanium and ceramic, no headphone jack, with a magnetic 360-degree camera add-on.[3][4] |
|---|---|
| 2017 | The phone launches. IDC estimates about 88,000 sold from launch to the end of the year.[5] |
| By Feb 2018 | Large price cuts roughly halve the phone's price. Sales stay weak.[5] |
| May 2018 | Work on a second phone reportedly stops, and the smart home product appears shelved. Reports also say the company is up for sale; Essential insists it is carrying on.[1][6] |
| Oct 17, 2018 | Essential cuts about 30 percent of its staff, reportedly mostly in hardware and sales, to focus on a "truly game changing consumer product."[6] |
| Oct 2019 | Playground Global, Rubin's venture firm and an investor in both rounds, cuts ties with Rubin.[2] |
| Late 2019 | Essential teases Project Gem, a tall, narrow phone, in renders and promotional videos.[1][2] |
| Feb 12, 2020 | Essential announces it is shutting down, saying it has no "clear path to deliver" Gem to customers. The PH-1 stops getting security updates and support.[1][2] |
The kill shot
A great résumé got the company funded, but nothing put the phone in front of buyers. A $699 phone from a new brand, with a weak camera at launch, could not sell enough to pay for the next one.
The first phone was the whole business, and it sold an estimated 88,000 units in its first months[5]. 9to5Google pointed to its weak launch camera and high price against HTC, Google and OnePlus, and said even price cuts that halved the cost did not fix sales[5]. With no second phone, the company cut staff and bet on a new kind of device[6], which it then could not ship[1][2].
The founder became a problem too. TechCrunch wrote that "explosive allegations of sexual misconduct" from Rubin's time at Google made him a liability[1], and Engadget said Playground cutting ties with him in 2019 likely made raising more money harder[2].
Red flags ignored
- Premium price, new brand. $699 for the first phone from a company nobody had bought from before.[3][5]
- The first impression was the camera. Its weak launch camera hurt it against established rivals.[5]
- One product, no follow-up. Work on the second phone stopped less than a year after the first one launched.[5][6]
- Renders instead of products. Gem was only ever shown in renders and promotional videos.[1]
The cost
$330 million raised[1][2] and a $1 billion peak valuation[1], for one phone that sold an estimated 88,000 units in 2017[5]. Owners were left with a phone that no longer got security updates or support[2], and Newton Mail, the email app Essential bought in 2018, was shut down with it[1][2].
The inversion
Pedigree gets you funded. Distribution gets you sales. Before building a premium phone, know exactly how buyers will find it, try it and get it.
What survived
Very little. The PH-1 lost its security updates and support[2]. Project Gem never shipped[1][2]. Newton Mail ran until the end of April 2020 and then stopped[1][2].
References
- ^ “Andy Rubin's Essential shuts down”. TechCrunch (Brian Heater), February 12, 2020. The shutdown, the Gem quote, $330 million, the $1 billion valuation, the disputed 2018 sale reports, Rubin's Android role and the misconduct allegations, Newton Mail.
- ^ “Andy Rubin's Essential is shutting down”. Engadget (Igor Bonifacic), February 12, 2020. $330 million across two rounds, Playground cutting ties in October 2019, Gem teased late 2019, end of updates and support, Newton Mail.
- ^ “Andy Rubin's $699 Essential Phone is finally here and it's weird”. PCWorld (Michael Simon), May 30, 2017. The unveiling at $699, unlocked on all major US carriers, titanium frame, 360-degree camera add-on.
- ^ “Andy Rubin's Essential Phone wants to be your next smartphone”. MobileSyrup (Igor Bonifacic), May 30, 2017. PH-1 design and specs, no headphone jack, the 360-degree camera.
- ^ “Less than 90,000 Essential Phones were sold in the company's first few months”. 9to5Google (Ben Schoon), February 12, 2018. IDC's estimate of about 88,000 units through 2017, the price cuts, the weak camera and high price.
- ^ “Essential fires 30% of employees, focussing on 'game changing consumer product'”. 9to5Google (Abner Li), October 17, 2018, citing Bloomberg. The 30% layoffs, second-phone work stopping in May 2018, the shelved smart home product, the spokesperson's quote.