SoftBank Group Corp., led by Chief Executive Masayoshi Son, has cancelled a planned $100 million investment in a smartphone startup (Essential Products Inc.) founded by Andy Rubin. Rubin created the Android software system which he sold to Alphabet Inc. (NASDAQ:GOOGC) in 2005.
The Android OS is the world’s most used smartphone OS. Second in line is Apple Inc.’s (NASDAQ:AAPLC) iOS. It’s worth mentioning that SoftBank’s Son has an increasingly close relationship with Apple and that relationship had something to do with SoftBank’s decision to pull out of the deal with Rubin, according to the Wall Street Journal.
A Complicated Deal
The deal with Rubin and Essential also called for SoftBank’s telecom subsidiary in Japan to provide marketing support for the spring release of Essential’s high-end smartphone. This would be a head of Apple’s expected fall release of its 10th anniversary iPhone.
Apple, in January, committed $1 billion to Son’s $100 billion Vision Fund. It’s not clear if SoftBank’s planned $100 million investment in Essential was to come from the Vision Fund or separately from SoftBank. None the less, the complications appeared to be too much and SoftBank’s support for Essential fell through.
A $1 Billion Startup
The addition of SoftBank’s $100 million investment in Essential Products would have valued the startup at about $1 billion, an astronomical amount for a smartphone startup. The main justification for that kind of valuation would be Rubin’s incredible reputation and track record.
Essential Products registered in California in 2015 led by Rubin and several ex-Google employees . The trademark listing indicated the company would make smartphones, tablets and "computer operating software for mobile phones."
It’s not known how SoftBank’s exit will impact Essential Products or the launch of its new Android-based smartphone designed to compete with iPhone 7 pricing.
Related: NEXT ‘STREAMER’ UP – YOUTUBE TV
Apple Enters AI
Meanwhile, as the impact of SoftBank’s withdrawal sorts itself out, Apple has been busy working on augmented reality (AI) glasses and iPhone features. Through acquisitions and targeted hiring, the company has been working hard to design "digital spectacles" that could connect to an iPhone and beam content like movies and maps.
To compliment the glasses, Apple is also working on AI features for the iPhone similar to Snap Inc.’s (NYSE: SNAP) Snapchat. Acquisitions include reality startups FlyBy Media and Metaio. Hires include major players from Amazon Inc. (NASDAQ:AMZNC), Facebook Inc.’s (NASDAQ:FBB) Oculus, Microsoft Corp.’s (NASDAQ:MSFTC) HoloLens and Dolby Laboratories Inc. (NYSE:DLBC).