TECH: A secretive startup by Andy Kleinman has raised $14 million from Shakira, Kevin Spacey, and others to build a smartphone that may work like a Nintendo Switch

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Andy Kleinman thinks the well has run dry for smartphones.

He’s not necessarily wrong. The phone market today is led by Apple, Samsung, a handful of Chinese companies with little Western presence — and that’s about it.

Few companies make big profits. And the devices themselves have become commodified to the point where fans’ most passionate disputes now concern display bezels.

Kleinman’s solution, then, is to go niche. He’s spent the past two years building a new startup called Wonder, which is aiming to build a number of devices, new phone included, aimed specifically at video game enthusiasts.

The Los Angeles-based company has largely been working out of the
public eye, but on Tuesday announced that it has raised $14 million to
date. That includes a recently-closed Series A round of funding led by
Grishin Robotics, a Russian VC firm focused on the Internet of Things, and TCL, a Chinese manufacturer behind select Roku TVs and various smartphones. Kleinman says the latter will help Wonder with manufacturing and distribution.

In a press release, Wonder says its first product will be “a new type
of portable hardware device that might be considered a hybrid between a
powerful smartphone and a gaming console.”

Kleinman declined to share more specifics in an interview with
Business Insider, but a source familiar with the company’s plans
described the product as a large, high-end mobile device that will work
with a number of accessories aimed at making it more useful for gaming.
That will include a dock for use with TVs, the source said, which helps
the device function somewhat like Nintendo’s Switch console. All of this is based on Android.

Kleinman has previously said the company is interested in virtual reality tech as well.

There is plenty of reason to be skeptical of a project like this. But
Kleinman and Wonder do have some relevant experience: Kleinman has
previously had stints at mobile game makers Scopely and Zynga, while a LinkedIn search shows veterans from HTC, Activision, Sony, and former Android modder Cyanogen holding prominent positions at the company.

Kleinman says there’s at least 50 people working directly on the
project today, but that the company is actively growing. Investors in
Wonder are similarly diverse, ranging from Silicon Valley types like Joe Lonsdale’s 8VC firm to Atari founder Nolan Bushnell to entertainers like Kevin Spacey and Shakira.

Reasons to doubt

In any case, starting from scratch in a saturated smartphone market
is extremely difficult. Making a mobile device aimed at gamers may be
even harder.

Wonder has big ambitions, but serious challenges ahead of it.

Wonder has big ambitions, but serious challenges ahead of it.
(Wonder)

Kleinman speaks frequently about how Wonder will focus heavily on the
community of enthusiasts it wants to build, but it’s not obvious that
the game-playing public wants gaming devices not made by Sony,
Microsoft, or Nintendo in the first place. Multifunction gaming devices
like the Nokia N-Gage and Sony Xperia Play have bombed spectacularly, as have alternative consoles like the Ouya. (Former Ouya CEO Julie Uhrman says she is currently an advisor to Wonder.) These are not names you want your stuff to evoke.

If Wonder does manage to find demand, then the challenge, as always
with video games, becomes software. Android-based gaming devices like
the Nvidia Shield have carved out some niche, but generally offer a
lesser selection of games than a console like the PlayStation 4. They
also live in a market far away from the iPhone.

Wonder, for its part, is promising “exclusive software, services, and
content,” and Kleinman says the company is meeting with “big, small,
and medium” gaming companies to make that happen.

The results of that will have to be more involved than Scopely’s brand of casual games, however, for Wonder to have any chance with the hardcore crowd Kleinman is targeting.

Not for everybody

For now, it’s not clear what Wonder’s device even looks like — or
where it will be sold — so there’s still plenty of room for speculation.
But Kleinman’s belief that future smartphones have to be significantly
differentiated to survive is sensible.

“If you think about cars, for example, it started as a basic method
of transportation, and over the years it started becoming more about —
there are different sizes, there are different colors, there are
different levels of luxury, different speeds,” Kleinman said. “People
started to get whatever they identified with the best.

“And so I think we’re here. If there’s going to be 4 billion people
with a smartphone in the next couple of years, it doesn’t make sense
that everyone has something that looks exactly the same. It makes sense
that people have experiences more unique to who they are.”

Android co-creator Andy Rubin launched the first phone from his new startup, Essential, last month.

Android co-creator Andy Rubin launched the first phone from his new startup, Essential, last month.
(Brian Ach/Getty)

Wonder’s plan to cater to its niche exclusively is what Kleinman thinks
will separate it from other new hardware startups like Andy Rubin’s
Essential, which unveiled a new Android phone last month.

“I’ve never said, ‘Okay, Wonder is going to go straight up and
compete with Apple, or Samsung, or Google in the same place.’ It’s not
the same thing. We’re focused on something specific,” Kleinman said.

Kleinman says the company has started production, and that it’ll
slowly reveal details about the device to those who sign up for an “Alpha program” on its website. A full reveal will then come before the end of the year.

Whether the result will be something appealing enough to attract the
enthusiasts Kleinman wants — and whether enough people even want to
trade their iPhones for a different device at all — is an open question.

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