Smartphone buyers wager $200mn on making one thing out of Nothing


A consumer-electronics start-up referred to as Nothing has secured financing of greater than $200mn to launch its debut smartphone, within the first try for a number of years by a newcomer to crack a market dominated by Apple and Samsung.

Nothing will unveil the design of its first smartphone, referred to as Phone (1) on Wednesday, earlier than it goes on basic sale this summer season. The machine has a clear again, revealing electronics elements akin to a wi-fi charging coil which are usually hidden, and runs on the Android working system.

The firm’s backers embrace Alphabet’s enterprise capital arm, EQT Ventures, chipmaker Qualcomm and former Apple designer Tony Fadell. They are betting that Carl Pei, Nothing’s chief government, who beforehand co-founded Chinese smartphone model OnePlus, can succeed the place even Andy Rubin, the co-founder of the Android cellular working system, failed.

Rubin’s start-up Essential raised $330mn however shut down in 2020 after its 2017 smartphone launch bought fewer than 100,000 models in its first six months, in accordance with estimates by analysis agency IDC on the time.

“I come from a very hardware centric background and he comes from a very software centric background,” Pei stated of Rubin in an interview with the Financial Times. “People with more credibility than I have tried and failed . . . They underestimated the complexity of this industry.”

After a number of years the place most smartphones have come to resemble Apple’s iPhone designs, Pei stated, “people are yearning for something new”.

After the failure of start-ups akin to Essential that tried to supply extra novel designs, the smartphone market has turn out to be extra concentrated.

According to market researchers Counterpoint, simply 4 corporations accounted for nearly three-quarters of the 1.4bn smartphones bought globally final yr.

Pei’s earlier enterprise, OnePlus, is a part of China-based BBK Electronics, which has turn out to be the fourth-biggest smartphone participant alongside Apple, Samsung and Xiaomi, by a variety of manufacturers together with Oppo, Vivo and Realme.

That focus has made launching a brand new handset much more tough in recent times, Pei admitted. Manufacturers are extra reluctant to work with newcomers after being burnt by low gross sales of earlier start-ups. Obtaining elements, lots of that are already constrained throughout the trade, is tougher for brand new entrants with decrease volumes.

Nothing’s chief government Carl Pei stated ‘people are yearning for something new’

Last yr, Nothing initially ordered round 700,000 screens for its first run of Phone (1) however has been capable of improve that order after elevating extra capital and constructing confidence amongst distributors with final yr’s launch of its first product, a pair of wi-fi earbuds that sport the identical clear casing as its forthcoming cellphone. Nothing has shipped 530,000 models of Ear (1) for the reason that machine went on basic sale final August.

That helped to “prove to the market that this team cannot only design a really beautiful product, but can manufacture and sell it at scale”, Pei stated. “Using this proof point, we raised more money to be able to build a smartphone. And if the smartphone subsequently does well we can raise more money to do the next thing we want to do.”

Nothing has raised $144mn in fairness funding and has a $65mn revolving line of credit score from its gross sales companions. The firm is working with O2 within the UK, Deutsche Telekom in Germany and Flipkart in India to distribute the cellphone when it launches, with ambitions to ultimately launch within the US if Phone (1) sells nicely.

With 330 employees, Nothing runs its provide chain and {hardware} from Shenzhen, China, with design and advertising in Europe and different groups in India, Taiwan and California. The mental property behind its merchandise are held within the UK.

“A lot of Android manufacturers are just taking market share from each other and not doing anything very different to be able to even attempt to take share from Apple,” Pei stated. “I think the result of this product is that we will be converting more iPhone users than other Android phones.”

As for Essential, a few of its concepts could also be getting a second life with Phone (1). Last yr, Nothing acquired a few of its mental property belongings.