2017 was supposed to be Essential’s coming-out party. With a reported valuation of $1 billion, Android co-founder Andy Rubin at the helm, and the near-bezel-less wonder known as the Essential PH-1, Essential should made a real splash.
Instead, Essential entered the smartphone market with a whisper.
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From the PH-1’s underwhelming sales and various issues to Andy Rubin’s personal baggage, 2017 was a year to forget for Essential. The company likely saw 2018 with a degree of optimism.
Unfortunately for Essential, the reality was very different. Let’s take a look at what 2018 looked like for Essential and what 2019 might have in store.
Essential in 2018: Struggles and layoffs
Having only one smartphone meant Essential didn’t have to split its attention across multiple devices. It also meant the company’s success hinged on how well the PH-1 performed.
Unfortunately for Essential, the PH-1’s poor sales continued.
A May 2018 report alleged Essential canceled development of its second smartphone. The same report also claimed that Essential hired a financial firm to look into selling off the entire company.
Following the report, Essential CEO and Android co-founder Andy Rubin sent an internal email to company employees. In the email, Rubin said that Essential would not shut down. He also said the company was in talks with bankers to raise additional funds.
Interestingly, Rubin also said the discussions with bankers might include talk about a possible acquisition. Nothing of the sort has happened, but that’s scary talk, considering the company reportedly raised $300 million almost two years ago.
Compounding matters, Essential laid off 30 percent of its employees in October. Most of the terminated employees reportedly worked in the company’s hardware and sales divisions.
An Essential spokesperson confirmed the layoffs, but didn’t reveal the reasoning behind the layoffs other than a “sharpened product focus.”
Andy Rubin’s personal troubles
The worst development for Essential had nothing to do with a potential company sale or laid-off employees. Andy Rubin’s personal history reared its ugly head.
In October 2017, Rubin reportedly took a leave of absence from Essential. According to a report released at the time, Rubin had an inappropriate relationship with a subordinate during his time at Google.
Rubin’s spokesperson didn’t deny the relationship, but said any relationship Rubin had at Google “was consensual.” Regardless, Rubin reportedly stepped away from his company and returned almost two months later.
This isn't a good look for a man running a company worth $1 billion.
Things only worsened for Rubin in October 2018, when a report revealed more details about the alleged relationship, apparently an extramarital sexual liaison with a female subordinate in a hotel room.
The relationship may have been consensual, but Google has strict policies against sexual relations with subordinates. As a result, Google reportedly forced Rubin out of his position at the company.
As if that wasn’t enough, Google also reportedly paid Rubin an exit package worth $90 million. The exit package was allegedly paid out over monthly installments of $2 million.
Rubin called the allegations a “smear campaign” against him.
Google came out looking much worse than Rubin, since the company reportedly made similar payments to other high-level executives. However, Rubin’s personal issues might have people wondering whether he’s the right man to lead Essential into its already clouded future.
It wasn’t all bad…
The PH-1 didn’t have the best of launches, but Essential ironed out its shipment issues in 2018. However, the phone still had its fair share of problems, particularly with the image processing and the camera app.
To the company’s credit, Essential pushed out more updates to the camera than we could count, which helped a bit with the image quality, though some just downloaded the Google Camera app and called it a day.
Those updates didn’t address the spotty cellular reception or touch response issues, but at least Essential was paying attention to PH-1 owners.
What’s more impressive is how well Essential did when it came to general Android updates. On some occasions, Essential even beat Google to the punch with some security updates. Even better, Essential promised it would push out Android Q to the PH-1.
It’s not a stretch to say Essential is the best smartphone manufacturer when it comes to timely Android updates, apart from Google.
In addition to software updates, Essential surprised people with its reported acquisition of CloudMagic. CloudMagic is the company behind the popular Newton email app, which shut down earlier this year.
It’s not clear why Essential would buy a company like CloudMagic, especially when Essential is reportedly struggling financially. It no doubt plays into what Essential has planned for 2019.
Essential in 2019: Not much to go on
With Rubin possibly selling Essential, we didn’t think the company would even have a 2019. That all changed with an October 2018 report, alleging Essential is working on a new AI-centric device with smartphone-like functionality.
The device reportedly uses artificial intelligence and voice commands to take care of menial tasks you perform on your phone, like answering texts, booking appointments, sending and responding to emails, and more without you doing anything.
Essential's immediate future could look very compelling.
As for the PH-1, the phone recently went out of stock across various retailers and Essential’s website. Essential said it would not replenish stock, officially discontinuing the phone.
Interestingly, Essential also said it’s working on its “next mobile product.” We don’t know if the product is the same AI-centric device mentioned in the earlier report. Either way, it seems Essential isn’t down for the count just yet.
A clouded future
Let’s talk about Red and the Hydrogen One.
Similar to the PH-1, the Hydrogen One was announced in 2017. Both phones built up a respectable amount of hype before release — the PH-1 had the enigmatic Essential behind it, while the Hydrogen One had its maker’s camera chops to thank.
The PH-1 and Hydrogen One are also somewhat modular — you could attach accessories to them to expand their functionalities.
Lastly, both phones were new entries from relative unknowns in the smartphone market. Essential and Red wanted to shake things up in different ways. They were companies that could take some attention away from mainstays like Huawei, Samsung, and Apple.
Unfortunately for Essential and Red, their phones were reminders that launching an Android smartphone in today’s market is extremely difficult.
It’s almost creepy how similarly disappointing the PH-1 and Hydrogen One are. Both phones didn’t live up to the promises of a modular ecosystem, had so-so cameras, and cost more than the experience of using them would indicate.
Essential at least eventually got smart and gave the PH-1 a permanent price cut.
Launching an Android smartphone in today's market is extremely difficult.
There is one key difference, however: Red has a clearer future for the Hydrogen One than Essential does with, well, anything.
With Red, we know modular accessories are probably coming. We know the company will probably release a Hydrogen Two. We know Red will probably not give up on the smartphone market.
We can’t say the same thing about Essential, even if we want to use the word “probably.”
As far as we know, the Essential Home smart hub is dead. Essential’s modular ecosystem only produced two accessories for a phone now permanently out of stock. We don’t know if Essential’s upcoming mobile device is a smartphone or something else altogether.
We don’t even know how Essential is financially performing.
I suppose that’s the answer for where Essential is and where it’s headed: we don’t know. Essential didn’t have much going on in 2018 in terms of product releases. The company only made news in 2018 because of software updates, CEO issues, and one or two company happenings. There’s not much to go on, and that might not change moving forward.
Perhaps the company will prove us all wrong with its upcoming mobile device. Perhaps Rubin’s personal life will stop dragging Essential’s name through the gutter. Perhaps the company will regain the workers it lost.
We don’t want Essential to fail. We want new smartphone manufacturers to rise and challenge the status quo. We’re tired of the same companies dominating the smartphone market, year in and year out.
We want Essential to succeed. We’re just not sure it’ll happen.