Joining Chinese media giant Tencent Holdings and Foxconn Technology Group, Amazon is now an investor in Android co-creator Andy Rubin’s smart hardware startup, Essential Products Inc.
The investment was part of a $300 million round of funding for Essential, where the participants were Amazon’s Alexa Fund, Access Technology Ventures, Redpoint Ventures, Altimeter Capital and Vy Capital. Access’s contribution was $100 million.
Essential’s first two products are already nearing release. The first is the Essential PH-1, a smartphone running what appears to be a stock Android 7.0 Nougat operating system. The second is Essential Home, which we’ve covered in quite a bit of detail in a series of earlier articles.
Essential Products Inc. is valued at around $1 billion, and that’s even before its first product has reached customers’ hands. Next week, Rubin intends to tell his customers when and where they can get their Essential PH-1. The information came directly from the ex-Googler on his Twitter account.
The Essential Phone isn’t really an iconic product, but being Rubin’s creation, it already has quite a bit of traction in the market. The titanium sides of the phone, the ceramic back panel, the lack of branding and other design elements do make it unique, but it pretty much runs the generic Android available to any smartphone maker, but with a modified UI. The phone will also offer modular components, the first of which was unveiled at an event in Ghana last month – a 360-degree camera.
Essential Home is a little more unique because, unlike Amazon’s Echo and Tap devices, it does not need to send every bit of data to the cloud for processing. Much of the AI heavy lifting is done within the device, making response times slightly faster and closing a big security gap during data transmission over the Internet. That’s thanks, in part, to Ambient OS, the new operating system that Essential Home runs on.
Essential Products Inc. now has total capital of $330 million, according to Access Technology Ventures. Amazon’s investment is a bit of a long bet, considering that the smartphone market is not really wide open to new competition. Even veterans of the game are struggling to eke out an operating profit, with the bulk of them reporting losses year after year.
But for Amazon, it’s not about smartphones. The investment is more likely a bet on Essential Home and future smart products from Andy Rubin’s company. That’s where the real money is, and Amazon has already gotten a taste of that with the millions of Echo and Tap units it has sold over the past three years.
Amazon continues to enjoy strong growth in the smart speaker segment, and the 2016 holiday quarter was a sign of that strength. With its presence now extending to multiple voice-activated devices powered by the skills-based AI entity known as Alexa, Amazon merely wants to make sure that it’s not missing out on anything even remotely related to voice activated devices.