Essential Products has stopped developing a new smartphone and is thinking of putting itself on sale, Bloomberg reported, citing sources familiar with the matter. The company, a startup co-founded by Android creator Andy Rubin, raised USD 300 million last summer to build a smartphone alternative to Samsung and Apple. It was then hit with a number of woes, from a customer data breach, and then allegations Rubin may have left Google due to some misconduct issues. Rubin took a leave of absence but came back to work in December.
Now, after taking on Credit Suisse as an advisor for a potential sale, Essential is actively looking for buyers. Sources say it has received interest from at least one. The idea to sell the entire company, including its patent portfolio, hardware products (the original smartphone), an upcoming smart home device and a camera attachment for the phone. The company’s engineers, which include those hired from Apple and Google, would probably also be part of the deal. No final decision has yet, however, been made at this point of time and Essential has declined to comment on the report.
Sprint launched a marketing campaign for Essential’s device when it was introduced. The original Essential Phone launched last August. The startup has spent over USD 100 million so far to develop its first products.
The company was working on a new model but has now cancelled that development, shifting its attention to its smart home product, on track for release by next year, the sources said. The original phone immediately struggled as buyers complained about poor camera capabilities, issues with the touchscreen and problems making phone calls. At the phone’s initial price of USD 699, the company sold 20,000 units, the sources added. After lowering the price by USD 200, sales took off a bit more. To date, Essential has sold at least 150,000 units, the sources said.
Investors in the company include Amazon, Tencent, Redpoint Ventures and Hon Hai Precision Industry. Essential was valued at USD 900 million to USD 1 billion about a year ago, according to Equidate, Bloomberg said.
