Essential Products, the home of a smartphone founded by a co-creator of the Android mobile operating system, has raised $ 300 million in new funds and has hired retailers to sell its first device, it said Wednesday.
The $ 699 phone, titanium and ceramic case, will compete directly against the new devices from Samsung Electronics and Apple Inc this holiday season. Retailers include Best Buy, Amazon.com and operators Sprint Corp in the United States and Telus Corp in Canada, Essential said in a statement.
The company, founded by Chief Executive Andy Rubin in late 2015, said Access Technology Ventures led the funding round, raising its total investment to $ 330 million. Strategic investors also included Tencent Holdings Ltd, contract maker of electronic products Foxconn and Amazon.com, which participated through its Alexa Fund. Previous investors Redpoint Ventures and Global Playground also participated. A launch date for Essential’s phone will be announced next week, President Niccolo De Masi said in an interview.
The timing and distribution of the new phone could be critical for a year with many new releases. The Essential phone will only show up in the Sprint and Best Buy stores in the United States, compared to the vast distribution network of the market leaders. In September, Samsung is expected to unveil its Galaxy Note 8, and Apple is expected to announce its long-awaited 10th anniversary iPhone.
Some of the features of the Essential phone, such as a detachable 360-degree camera, are also available on Samsung models, which are more bulky. “It’s going to be extraordinarily difficult,” Bob O’Donnell of Technalysis Research said by telephone. “The initial specifications of the phone look good, but not necessarily unique.”
Amazon, Best Buy and Essential will sell unlocked phone versions that can be used on any network. But carrier discounts could encourage buyers, R. “Ray” Wang of Constellation Research said in an interview. He said he expected Sprint to charge $ 300 on a two-year contract. Sprint did not return a comment request.
Wang also said that the presence of two strategic Asian investors marks the broader goals of Essential. “It’s not just the US distribution, it’s a global phone,” Wang said. “The biggest phone markets are China, India and the United States.”
Essential will focus on “building a brand in the Western world” before expanding to other countries, De Masi said. He would consider sales of “low-single-digit millions” of phones in his first year to be a success, he added, noting that production was limited by unusual titanium and ceramic materials. Most phones have aluminum or plastic casings. “In the next five to 10 years, we will have the same sales footprint and product diversity as Samsung and Apple,” he said.
