Andy Rubin is the father of the Android operating system that powers hundreds of millions of smartphones around the globe. Rubin broke away from Google and eventually wound up at a new company called Essential Products Inc. The company's first smartphone was the Essential Phone and it flopped massively. Reports indicate that the Essential Phone sold fewer than 90,000 units in all of 2017. A person claiming to be familiar with sales claims that Essential has sold about 150,000 units to date.
Reports have surfaced that things are bad enough over at Essential that the company has stopped development work on its next smartphones. The sources also claim that Essential has hired Credit Suisse Group AG to advise on a potential sale, and at least one potential buyer is reportedly circling.
Bloomberg reports that the startup portion of Rubin's company, Playground Global, has raised about $300 million from investors that include Amazon.com Inc., Tencent Holdings Ltd., and Redpoint Ventures. About a year ago, Playground Global was valued at as much as $1 billion. About a third of the cash that was raised was spent to develop Essential's first products, including the Essential Phone.
The sale discussions are focused on selling the entire company, including its patent portfolio, hardware products, and upcoming devices including a smart home device and a camera attachment for the original phone according to the sources. The engineering talent that Essential has on staff, including former Apple and Alphabet talent is reportedly part of the deal.
Rubin tweeted, "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." The development of the next smartphone was canceled and the engineers on that device were shifted to a coming smart-home product that is on track to launch next year. With Essential now up for sale, the fate of that product is unknown. The Essential Phone is still available and its latest price is down to $399.