Essential Tried to Upend Smartphones. Now It is Shutting Down
12 Febrero 2020 - 5:10PM
Noticias Dow Jones
By Sarah E. Needleman
Essential Products Inc., the smartphone company from the father
of Google's Android mobile software, is shutting down after less
than five years in business and raising $330 million in
funding.
The startup said Wednesday it will cease operations and no
longer provide software updates or customer support for its $499
titanium-encased smartphone, with its 360-degree camera, 128
gigabytes of storage and minimalistic design. The company had been
working on a new device under the name Project Gem, but it wasn't
brought to market.
California-based Essential was attempting to take on technology
juggernauts Samsung Electronics Co. and Apple Inc., which have
dominated smartphone sales in recent years. Chinese internet
company Tencent Holdings Ltd. and Amazon.com Inc.'s Alexa Fund
participated in a $300 million funding round for Essential in
2017.
"Despite our best efforts, we've now taken Gem as far as we can
and regrettably have no clear path to deliver it to customers,"
Essential said on its website. Neither an Essential spokesperson
nor Andy Rubin, the company's founder, could immediately be reached
for comment.
The company quickly rose to prominence largely because of its
high-profile founder, Mr. Rubin, who sold his previous startup,
Android, to Google in 2005. He then helped Google turn Android's
software into the world's most-used smartphone operating system.
Mr. Rubin left Google in 2014.
Around the time of his departure from Google, Mr. Rubin said he
was starting an incubator for startups interested in building
technology hardware. But a shareholder lawsuit filed in California
Superior Court last year called into question the circumstances
behind Mr. Rubin's exit from the company.
The lawsuit accused Mr. Rubin of sexually harassing a
subordinate and that the Alphabet Inc. unit schemed to cover up the
behavior. It also claimed Google paid exit packages to Mr. Rubin
and another former executive accused of similar behavior that
totaled roughly $135 million.
Through an attorney, Mr. Rubin has previously denied any
misconduct. The attorney, Ellen Stross, pointed to the announcement
of Essential's closure on its website and didn't address the matter
of the lawsuit, which is ongoing.
Mr. Rubin founded Essential in 2015 with plans to take advantage
of the company's small size to innovate faster than its large
counterparts. In a blog post in Essential's early days, Mr. Rubin
said he wanted to create a smartphone that wouldn't require an
update every year or be bogged down by features such as
preinstalled apps.
From the start, Mr. Rubin's company faced an uphill fight,
producing a commodity handset for the already overcrowded Android
smartphone market. In recent years, Apple and Samsung have worked
to pack features into devices that can sell at a premium of $1,000
or more.
Three companies -- Samsung, Huawei Technologies Co., and Apple
-- accounted for nearly 50% of smartphone shipments world-wide at
the end of last year, according to Counterpoint Research. Overall
smartphone sales world-wide also contracted for the second year in
a row in 2019 after nearly a decade of growth, Counterpoint
says.
Other startups have tried and failed to crack the smartphone
market. Amazon.com Inc.'s Fire phone was a flop, and South Korea's
LG Electronics Inc. made changes in its mobile division after
efforts to differentiate its products through design ended up as a
bust.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
February 12, 2020 17:55 ET (22:55 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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