How did a company flush in money, talent, and a founder with a stellar pedigree only sell 5,000 units of its first phone?
The truth is that Essential’s Andy Rubin is out of touch with reality. Employees are quietly expressing their doubts, and the public has been skeptical for months. Now the false narrative set by Rubin early on is being exposed.
Hype was building months ahead of the Essential Phone’s debut on May 31. Rubin started Playground Global, an incubator for technology products, in late 2015. This was after spending many years developing Android and serving in different capacities at Google. Playground Global immediately raised $300 million, and the belief was that a portion of the fund would be allocated toward the creation of a company that makes hardware while a significant amount of money was set for advancements in artificial intelligence.
His expertise is in software, so Rubin appeared to be making his return to the mobile industry with a phone featuring best-in-class machine learning.
It became clear by the start of 2017 that he did indeed plan on making his own phone. Rubin observed Apple, Samsung, and others flooding the market with devices that didn’t have cross-compatible software. The mission for his new company would be to create a phone that played nice with, well, everything. But the company doing the work, known as Essential, wouldn’t create its own operating system. It would rely on Android, the same platform Rubin helped create more than a decade ago. Somehow Essential would figure out a way to make a phone based on one platform that worked with every platform. No one seemed concerned that it couldn’t be done considering the talent of engineers assembled at Essential.
Former employees at Google, HTC, Apple, and beyond jumped ship to join Rubin. They believed that, despite leaving well-established companies, fulfilling Essential’s mission could have the biggest payoffs of their lives. If they could topple the stronghold three brands had on the mobile hardware and software, Essential would be viewed as a success on the same level as Android by creating an all-inclusive ecosystem.
As we approached the launch, little was known about Essential. Inside sources and one official teaser provided few pieces of information. Essential and Rubin did an above average job keeping the Essential Phone private. Then the big day came four months ago. On May 31, the Essential Phone was born.
Rubin revealed what he and Essential had been working on through various interviews with major outlets. On Essential’s site, the story of the company and its first product were explained in depth. Rubin said hardware engineers felt design had become stale while software engineers felt constrained by competing platforms. The solution, according to the Android co-founder, was to make a phone that focused on premium craftsmanship that embraced multiple ecosystems. Headlines were published online and in print proclaiming that the “father of Android” was back and ready to put the longtime players on blast.
The Essential Phone was praised by critics for its unique design. Its titanium and ceramic body promised to be more durable than anything else on the market, and the display was truly edge-to-edge. Specifications, however, were a little tamer, featuring standard components for a 2017 flagship. Still, Rubin impressed everyone by showing us a phone that, at least visually, was fresh.
But Rubin failed to reveal how the software would make the Essential Phone stand out. After all, Rubin is a software-first kind of guy and Essential was believed to have hundreds of millions of dollars invested in artificial intelligence. That’s why Rubin’s Code Conference 2017 interview with Kara Swisher and Walt Mossberg of Recode was so important. The resulting takeaway was that Rubin just doesn’t understand the world of mobile today.
His interview with Swisher and Mossberg was, frankly, bizarre. The interviewers asked the right questions, but Rubin jumped around all of them. Most of the time he came across as pompous and standoffish. At one point, he seemed frustrated that the two weren’t understanding him. Rubin couldn’t tell them, or more importantly us, what differentiates the Essential Phone aside from being sexy. Plenty of phones look good, and the Essential Phone isn’t alone in running stock Android.
That was an hour where Essential had all eyes on it to proclaim advantages but the entire window of opportunity was wasted. Rubin was pressed for answers about creating an all-inclusive ecosystem but told nothing.
Fortunately, the interview Rubin gave at the Code Conference 2017 didn’t overshadow the Essential Phone’s momentum. Headlines continued being published, and people started to wonder if Essential really could change the landscape of a divided industry. There was genuine interest from many consumers who wanted to get their hands on the Essential Phone. The initial promise was for the Essential Phone to be released 30 days after the launch. Essential ended up blowing that, too. It took more than 80 days for the Essential Phone to go from being announced to being released.
From the day it was introduced, the Essential Phone was doomed.
Essential knew it needed help to gain visibility, but it decided to sign an exclusive agreement with one carrier rather than being offered by all four major U.S. carriers. Rubin leveraged his relationship with Masayoshi Son, the head of SoftBank, to make Sprint the only carrier selling the Essential Phone. That’s a confusing move because Essential is a new brand and Sprint isn’t exactly the biggest carrier.
The 30-day slot for a release passed, and it was in mid-July when cracks started to show. Those who believed in Essential merely six months earlier started abandoning Rubin. Essential lost Brian Wallace, who was overseeing manufacturing, and communications guru Andy Fouché. Other employees also exited the company, though it’s unclear how many left on their own accord or were asked to resign.
Between his appearance at the Code Conference 2017 and the reports of low employee morale, Rubin penned a letter to prospective buyers of the Essential Phone. It offered no apology but instead championed the company’s efforts to get the phone on the market. The “good news,” Rubin said, was that the phone was being tested by carriers to gain certification and a release would occur in the “next few weeks.”
This showed us that Essential announced something that was not real. The Essential Phone was merely a prototype on May 31, which explains why no members of the media touched the device until months after it was official. Essential needed to control the perception that its first product was ready but was going through standard hurdles of carrier testing.
When August rolled around, the majority of consumers became fixated on the Samsung Galaxy Note 8, LG V30, and Apple iPhone 8. If Essential had released the Essential Phone shortly after its launch, maybe it would’ve remained in the conversation. Yet, on August 9, the company tried to again reignite its barely-there spark by saying it would soon share the release date. The following week, on August 16, Essential said it would ship the Essential Phone within seven days.
Even the promise to ship the Essential Phone within a week of the last statement turned out to be incorrect. The Essential Phone started shipping, for real, on August 25. Did anyone care? Not really, and a data breach broke whatever trust anyone still had. Essential mishandled personal information by accidentally sending an email that requested a copy of customers’ driver’s licenses. Some customers responded, and their personal information ended up going to other customers.
Again, to date, Essential has sold around 5,000 units of its sole product.
The path that’s been described so far has included what the public already knows. People have been skeptical from the moment Essential made its baffling entrance. They’re not alone. Current employees have their own doubts in the chances of Essential being successful.
One employee, who asked to remain anonymous, revealed to TechnoBuffalo that Essential isn’t sure if any of the other color options will be shipped. The Essential Phone in Black Moon is giving them a hard enough time as manufacturing on the large scale is its own challenge.
Here’s part of what we were told:
“[Production] is tough, it’s really, really tough. Everything keeps breaking. Every little thing we do makes another part of the device not work. So we’re moving slower than expected. You know, we have to figure this out before moving on to something else. We all want it to work. We’re hoping.”
Units in production facilities overseas are appearing to have exterior defects or malfunctioning components, and the fancier styles like Ocean Depths can’t be implemented on a usable device. The employee was blunt in telling us not to expect Ocean Depths or Stellar Grey to ever ship.
It didn’t take private conversations to understand their frustrations either. When I attended Essential’s showcase in New York City, the phone was downright buggy. One product expert couldn’t get the 360-degree camera to work properly right away. He needed to try different combinations of two cameras and four phones before I saw how the attachment on the Essential Phone works. He was nervously explaining the technology behind the phone and its accessory while frantically switching pieces. When it did work, the 360-degree camera was incredible but I was already disappointed by the long wait. Another product expert struggled to tell me why the Essential Phone’s software is better than the Google Pixel’s. It’s a tough thing to describe, but I didn’t get anywhere.
There were also high-level executives at the showcase in New York City who didn’t talk with the media. They instead limited themselves to interactions with fellow employees and Essential’s business partners. Both left well before the event was over.
What’s the company to do next? Essential itself doesn’t know what’s going on. That falls on one person: Andy Rubin.
Essential looks bad because he makes them look bad. He’s relied far too much on his name and place in history to sell the Essential Phone, which obviously doesn’t mean very much as only a few thousand units have been sold. Rubin thinks keeping secrets and making empty promises will work. It won’t. Never has, never will.
As much as I and so many respect him for contributions, Rubin has failed to understand the state of the mobile industry. His company stands no chance if it isn’t going figure out how to mass produce a phone, distribute it effectively around the world, and run big-budget advertising campaigns. The idea that you can release a phone backed by your founder’s past is ridiculous. The average consumer is unaware of who’s behind Essential.
Until Andy Rubin changes his way of thinking, Essential stands absolutely no chance. Today it’s just a $1 billion company that got our hopes up and appears to have fooled us all.