Android Creator’s Startup Raises $300 Million
Essential Products, the smartphone startup founded by a co-creator of the Android mobile operating system, announced on Wednesday it has raised $300 million in new funding and signed up retailers to sell its first smartphone device.
The company, founded by Chief Executive Andy Rubin in late 2015, said Access Technology Ventures led the funding round, which added up its total investment to $330 million.
Strategic investors included Tencent Holdings Ltd, electronics contract manufacturer Foxconn and Amazon.com, which participated via its Alexa Fund. Other backers included Redpoint Ventures, Altimeter Capital and Vy Capital. Access said it contributed about $100 million to the pot.
The $699 phone, with a titanium and ceramic case, will compete directly against new devices from Samsung Electronics and Apple Inc. this holiday season. Retailers include Best Buy, Amazon.com and carriers Sprint Corp in the United States and Telus Corp in Canada, Essential said in a statement.
A release date for Essential's phone will be announced next week, President Niccolo De Masi said in an interview.
In a tweet on Wednesday, Rubin said the company was in "mass production" of its phone and that additional information would be available next week. He also posted pictures of the production process.
“We are in full mass production, ramping up to deliver your Essential Phone. Find out where you can get yours next week!”
Rubin’s Essential is looking to break into the increasingly competitive field of consumer electronics.
The startup, which emerged from an incubator he formed after leaving Google in 2014, is said to be valued at $900 million to $1 billion and represents his return to a market now crowded with a raft of Chinese players going after leaders Apple Inc. and Samsung Electronics Co.
Some of the Essential phone's features, like a detachable 360-degree camera, are also available on Samsung models, which are bulkier.
"It's going to be extraordinarily challenging," Bob O'Donnell of Technalysis Research said by phone. "The initial specs of the phone look good, but not necessarily unique."
In addition to its smartphone, Essential plans to release a smart speaker later this year to compete with Amazon's Echo devices as well as with Google Home and Apple's upcoming HomePod.
Rubin said the speaker, called Essential Home, will be designed to interact with various smart-home ecosystems and that owners will be able to use Amazon's Alexa virtual assistant or Alexa's competitors, Apple's Siri and Google's Assistant to control it.
Essential will focus on "building a brand in the Western World" before expanding to other countries, De Masi said. It would consider sales of "low single-digit millions" of phones in its first year a success, he added, noting that production was limited by the unusual materials of titanium and ceramic. Most phones have aluminum or plastic casings.
"Over the next five to 10 years, we will have the same retail footprint and product diversity as Samsung and Apple," he said.
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