Essential, Andy Rubin's new smartphone company, announced its first smartphone last week. Now that its smartphone is announced, the Essential PH-1, and the fact that the company is planning to sell this unlocked and not hook up with carriers, analysts are talking about how tough it'll be for Essential to actually sell this phone and make a profit. Currently, the smartphone market is owned largely by Samsung and Apple. Both of whom have partners with all of the major carriers in the US and many other countries. Now CCS Insight believes that Essential is going to face some pretty stiff competition from those two, as well as other smartphone makers in the market.
In a research note, CCS Insight specifically called out Essential's distribution plans. Noting that "supporting carrier bands is not the same as getting support from carriers." Continuing by stating that "selling smartphones on the open market in the US is notoriously challenging." This is something that CCS Insights have noted plenty before, and other manufacturers have tried and basically failed at doing. While other countries have a lot of smartphones sold directly from the manufacturer, that doesn't work in the US. The vast majority of smartphones sold in the US are from the carriers, typically from the carrier stores, and on interest-free financing or leasing. And that's largely because most people don't want to put down $600, $700 on a smartphone, but would rather pay $25/month for two years for that smartphone.
Not only that, but Essential is not bringing their phone to the usual retailers, like Amazon, B&H Photo and Best Buy. Instead it'll be sold via its website only. And to top it all off, Essential is only selling the PH-1 in the US. It won't be making its way to other countries any time soon. All of that is a recipe for a phone that won't sell well. But then again Andy Rubin is a popular figure in the Android world, after all, he basically co-founded Android and then sold it to Google who made Android what it is today. So if anyone is able to do this, it would be Rubin.