Andy Rubin's Essential faces stiff headwinds against Apple, Samsung, CCS Insight says

Essential CEO and founder Andy Rubin

Andy Rubin’s latest smartphone venture will face major challenges in elbowing its way into an established and crowded market, CCS Insight said this morning.

Rubin, who created Android, made headlines last week when he unveiled his first project since leaving Google in 2014. The company’s first phone, the Essential PH-1, is a high-end, Android-powered gadget positioned to compete with Google’s Pixel and Samsung’s new Galaxy S8: The $700 modular handset is sold unlocked and features a Qualcomm Snapdragon 835 processor, 128 GB of internal storage and a 360-degree camera that can shoot spherical UHD images at 30 frames per second.

“Devices are your personal property. We won’t force you to have anything on them you don’t want to have,” Rubin wrote on the company’s blog. “Devices shouldn’t become outdated every year. They should evolve with you.”

The new phone is made of titanium and ceramic and notably lacks any logos; Essential began taking preorders for the device from U.S. buyers last week.

Those materials are likely to make the phone more resistant to drops and scratches than aluminum and other more commonly used elements, CCS said. And the PH-1’s modular add-ons—which are magnetic—could prove compelling.

But while the phone supports a variety of carrier bands, Essential faces significant challenges with distribution, CCS said.

“Supporting carrier bands is not the same as getting support from carriers,” the firm observed. “Selling smartphones on the open market in the U.S. is notoriously challenging. It’s a fact we’ve highlighted several times. The vast majority of handsets in the U.S. are sold with carrier support through interest-free financing or installment plans.”

And the high end of the U.S. smartphone market is likely to be particularly difficult to break into. Apple’s iPhone remains the dominant handset in the U.S., according to recent data from Strategy Analytics, and Samsung has cemented its place in the minds of Americans.

“There’s no denying the pedigree behind Essential and its two new devices,” CCS concluded. But the challenges of existing business models and large installed bases mean that the company faces an uphill struggle to compete in the current hyper-competitive smartphone market, particularly against heavyweights such as Apple and Samsung. At present, there’s a strong argument to suggest that it’s only Andy Rubin’s involvement that gives pause for thought as to whether consumers will find this an essential smartphone to have.”