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The Essential Phone 2 has reportedly been canceled

Essential has canceled plans to develop a second phone and is exploring selling off the entire company, according to Bloomberg. Much of the details remain up in the air. Talks of a sale sound like they aren’t very far along, and the report says that Essential still has plans for future products.

One thing that does sound certain is that Essential’s second phone — at least as it was originally planned — isn’t going to happen. Bloomberg says the development was canceled and that engineers are now working on a smart home product, which is supposed to be released next year. That may be the Echo competitor that Essential announced a year ago, but which we haven’t heard a word about since.

Bloomberg reports that Essential has considered remaining in the phone business, just not by designing devices itself. Instead, Essential would reportedly contract Foxconn to handle most of the phone’s development. Its first and only phone has only sold around 150,000 units since it went on sale last August, according to the report.

Talks of a sale don’t seem to have gone very far just yet. If it does happen, Essential is reportedly hoping to sell everything — patents, hardware, upcoming projects; the intention is even to shift employees to whatever new company picks it up. Essential is “actively shopping itself” around, according to the report.

In a statement, Essential seemed to confirm that development on its next phone had been canceled. “We always have multiple products in development at the same time and we embrace canceling some in favor of the ones we think will be bigger hits. We are putting all of our efforts towards our future, game-changing products, which include mobile and home products,” an Essential spokesperson wrote in an email to The Verge.

Essential founder Andy Rubin, also the co-founder of Android, game more insight into the ongoing process in an email to employees obtained by The Information. “No one (including me at this moment) knows what the best thing for the company will be,” the email reads. The company is allegedly “working with bankers to raise money,” according to Rubin.

Essential debuted last year to immense excitement due to what was, at the time, a remarkable design. But other companies quickly caught up with Essential’s full-screen look. And its phone ultimately failed to live up to enthusiasts’ high hopes. It had a number of software problems and was known for having a bad camera. On top of that, it sold for $699, putting it in the same league as top tier phones.

Over the course of the year, Essential has worked to fix the flaws in its first phone through software updates, and it has managed to improve the situation to an extent. But it isn’t clear what the company can do to wow consumers a second time around since nearly every major phone introduced this year includes a similar edge-to-edge display. It sounds like Essential may now have realized how difficult it is to stand out in a market that moves this incredibly fast.

Update 5/24, 6:41PM ET: Added comment from Essential CEO Andy Rubin’s email to employees.


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