Three months after acquiring iconic audio tech company THX, Razer is making another move to expand its business beyond hardware and software for the gaming community. The company has acquired Nextbit, the startup behind the Robin smartphone, founded by Android veterans who had set out with high hopes (and some decent funding) to rethink how to build a mobile phone that leant on cloud storage.
Financial terms of the deal, which closed earlier this month, have not been disclosed by either company, but sources hint that there was a decent equity portion to it. Nextbit had raised $18 million in funding from Accel, GV, and Dentsu, plus another $1.36 million on Kickstarter as part of a crowdfunding campaign partly used to market the Robin smartphone.
Razer will be bringing on Nextbit’s staff of 30, and Min-Liang Tan, Razer’s co-founder and CEO, said in an interview that the plan will be to develop more products keeping the Nextbit brand, which will operate as its own standalone business unit.
“We’ve been huge fans of what Nexbit has been doing,” he said, “both the work on the phone technology and on the cloud-based storage side of things. There is a lot of potential and talent.”
But the carry-over will not include Nextbit’s Robin phone — which in any case was no longer being sold by Nextbit, either. Min confirmed that the Robin has been discontinued, but the software and existing phones will continue to be supported for at least the next six months.
As for what is coming next, Min would not specify whether that will be something similar to what Nextbit has made before or something else altogether.
“We’ll be ready to talk about that when we’re ready,” Min said in an interview. “With Nextbit, it was really the design talent we wanted to bring in. We have a good track record of going into traditional markets and building out from there.”
After THX, and gaming company Ouya, this is the third recent acquisition for Razer (which itself has disclosed around $125 million in funding from backers like Intel and Accel, with a valuation of well over $1 billion). But as a possible guidance of where Razer might go with Nextbit, we could look further back to 2008, when Razer quietly acquired another company, OQO, whose team served as the core of its move into laptops.
Another clue might be found in something that Tom Moss, the co-founder of Nextbit who served as its CEO, told me about the acquisition. He said there were others who approached Nextbit, “the companies you would expect, some interested in what we were already doing in hardware, and others interested in what we were doing in software,” but the good thing about Razer, he added, “is that we can continue to do both.”
(Moss and Min were introduced, he said, not by common investor Accel but by Tom Lagerling, VP of partnerships at Facebook, which is probably the perfect job for him.)
Razer has been focused squarely on gaming (the company’s motto is “By Gamers. For Gamers”), and it has been a pretty aggressive believer in targeted, vertical integration, building a wide range of hardware and software for the gaming market. So it’s interesting that before now, the company has stayed away from making mobile phones, which have such a strong link to the gaming world.
It’s not clear why that’s the case, but it’s worth wondering what kind of a role the branding of another “Razr” phone may have played. Motorola, now owned by Lenovo, made a very popular range of handsets under the Razr brand in two phases, first a “razor-thin” flip phone and then the Android-based Droid Razr, and you can imagine how potential trademarking issues or just concerns about brand confusion would have kept Razer away from the mobile handset game.
(Small, coincidental side note: years ago, Moss started, and his Nextbit cofounder MIke Chan worked at, a startup called 3LM, which was eventually acquired by none other than Motorola.)
For Nextbit, the startup has found a landing place where its business can tap a large existing audience of Razer customers and (importantly) fans.
But on the other hand, its decision to go the acquisition route underscores the many challenges of building hardware or cloud-based businesses (let alone a company that wanted to do both) from the ground up in today’s market — where both areas are dominated by scale: outsized companies, huge customer bases and lots of capital.
Nextbit itself was no stranger to those problems: the company had planned, and sold against, but ultimately cancelled a plan to launch a CDMA version of its original GSM-based Robin handset, a crucial turning point for the startup.
Time will tell if Razer will be a big enough platform to step up into the race more definitively. In its favor, it’s had an interesting and quietly successful track record so far.
And there are the bigger trends of the tech world. “Every time there is a status quo for top players, something else comes along,” Moss said. “Innovation definitely slowed in the past few years, but I think of it as more of a pause. As well as technology being on the bleeding edge, there is still a lot of opportunity for change. There always has been.”