Andy Rubin’s Essential Smartphone Takes Aim at the Apple Inc. (AAPL) iPhone

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Andy Rubin and his new company Essential Products are preparing to make a big announcement on May 30. Rubin took to his Twitter Inc (NYSE:TWTR) account to give the heads up. He then pointed followers to Essential’s new Twitter account, where a teaser silhouette of a smartphone in a hand was posted. It looks like the long-rumored Essential smartphone, expected to be aimed directly at Apple Inc.’s (NASDAQ:AAPL) iPhone, is about to be official.

Andy Rubin’s Essential Smartphone Takes Aim at the Apple Inc. (AAPL) iPhone

What’s Known About the Essential Smartphone

The Essential smartphone has yet to be launched. Andy Rubin and Essential Products have been very secretive about the device they’re developing, but occasional hints and discussions with mobile carriers have combined to provide clues about what they’re up to.

We first reported on the Essential smartphone back in January. That’s when Bloomberg broke the story that Rubin and his company were prototyping a new premium smartphone and shopping it to Sprint Corp (NYSE:S) executives.

According to Bloomberg, the new device ran Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Android operating system. That was no surprise since Rubin created Android before selling it to Google. However, considerable effort was being put into ensuring the new device was not going to be just one of dozens of unprofitable (or barely profitable) Android smartphone clones.

Instead, the Essential smartphone would be a premium, flagship-quality device aimed directly at the market dominated by Apple’s iPhone.

Bloomberg reported prototypes had a larger display than the iPhone 7 Plus, but in a smaller form factor thanks to a virtual lack of bezels. The display was mounted in a premium ceramic backing — the kind of material AAPL currently uses for its most expensive Apple Watch Edition Series 2. Magnetic charging was in the mix, and engineers — many of whom had been hired from Apple and Google — were working on pressure-sensitive display technology.

The Essential smartphone prototypes also featured a charging port that did double-duty for connecting accessories.

The tweet from Essential shows the silhouette of a smartphone, with a large object jutting from the top corner, suggesting there is an add-on plugged into it. And Rubin tweeted another hint, with a photo of a colleague working at what appears to be a 360-degree camera testing station. The Verge published an enhanced version of the photo in that Essential tweet and it shows what is almost certainly a camera accessory.

So at this point, we are looking at a premium Android smartphone, designed to accept accessories to enhance its functionality — with a 360-degree VR camera looking to be one of those. It’s likely to support wireless charging and be equipped with a pressure sensitive display, similar to the iPhone’s 3D Touch.

Could Essential Products Pull This Off?

Breaking into the very mature smartphone market is extraordinarily challenging. Amazon.com, Inc. (NASDAQ:AMZN) suffered a humiliating defeat when it tried to release its own Fire Phone a few years back. And earlier this year, former Google VP Hugo Barra left Xiaomi — where he had been hired to bring that company’s smartphones to the U.S. market — after apparently concluding that helping Facebook Inc (NASDAQ:FB) promote VR adoption would be a less frustrating endeavor.

Modular smartphones have also fallen flat, despite early promise. Google killed off its Project Ara and after introducing the modular G5 smartphone last year, LG abandoned that approach with a traditional G6 smartphone for 2017.

However, Andy Rubin is the creator of Android. He has enormous cred in Silicon Valley and that has gone a long way with investors, assembling a team of experienced engineers for Essential Products and in building buzz. VR and augmented reality are also huge right now, and no one has yet been able to effectively combine that with a smartphone, especially when it comes to content creation — the closest thing is standalone VR cameras that can upload footage to a smartphone.

And Rubin has at least been in talks with U.S. carriers — their support is critical if the Essential smartphone is going to have a chance at succeeding.

At the moment, both Samsung Electronics (OTCMKTS:SSNLF) and AAPL are more vulnerable than they’ve been in a long time. Samsung because it’s still bruised from last year’s Galaxy Note 7 battery debacle and Apple because of a growing sentiment that the company’s standards are slipping and its best days may be behind it. If you’re going to hit them, now is the time to do so, before Samsung fully recovers and AAPL releases the 10th anniversary iPhone 8.

The Essential smartphone just might have a shot at cracking the U.S. market and doing what so many others have failed to do: take on the Samsung Galaxy and Apple iPhone for a share of the nearly 94% of all global smartphone profits those two companies commanded in 2016. We’ll have a better idea of the Essential smartphone’s odds on May 30, when Andy Rubin says he’ll be making that big announcement.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.


Article printed from InvestorPlace Media, https://investorplace.com/2017/05/andy-rubins-essential-smartphone-apple-inc-aapl/.

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