Andy Rubin appeared to confirm his Essential start-up canned development of its next smartphone, as Bloomberg reported he is set to put the struggling company up for sale.
The news outlet reported the vendor was no longer working on its next smartphone and hired Credit Suisse to advise on a sale, which had already generated interest from “at least” one potential buyer. Essential is also actively shopping for more suitors, Bloomberg said.
In a tweet, Rubin appeared to respond to the article’s assertion regarding development of a new smartphone, but did not address the sale rumours.
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
The brand has notably struggled to capture a foothold in the smartphone market with lukewarm sales, despite launching in a blaze of publicity.
Research company IDC found Essential shipped fewer than 90,000 units of its first smartphone, priced at $699, during 2017 (albeit the numbers did not cover the full year).
The company attempted to fuel interest with new device colours and a price cut, but it appears Rubin may be giving up on his ambitions to compete with Samsung and Apple in the smartphone segment.
Technology share trading company Equidate valued Essential at around $1 billion when it launched. The vendor also gained backing to the tune of around $300 million from investors including Amazon, Tencent and Redpoint Ventures.
US operator Sprint also threw its weight behind the company when Essential’s first device came on to the market, signing as its exclusive operator partner in August 2017. But, as the smallest of the four major US operators, questions were raised regarding the reach Sprint offered.
Smart home potential
Bloomberg sources said Essential spent $100 million on developing its first products and had been working on a new smartphone model. These plans have, however, been ditched, with engineering and other resources shifted towards an upcoming smart home product due for release by 2019.
A potential sale is likely to include the company’s entire portfolio, including its original smartphone, a camera attachment to the device and the smart home device.
Richard Windsor, founder of analyst website Radio Free Mobile believes Essential’s smart home product could be where the company’s long-term potential lies, representing “a good tuck-in acquisition of one of its existing investors or someone else that is looking to expand its presence” in the sector.