I don't think they're competing with the iPhone, though. At this point I don't think it's wise for any Android OEM to focus on Apple. I think these two platforms are so mature that people are pretty much staying put.
Rubin's problem is that as we get closer to fall, there's a new Note, V30, and Pixel 2 that he's going to have to compete with. Pixel 2 is the most problematic of all of them for Essential as both phones are going after the same audience, and Pixel has a track record along with being the official "Google phone" which kind of equals any cache associated with "Andy Rubin's Android phone".
Everybody is competing with the iPhone, and I mean everybody. But even ignoring that they have to compete with the pixel 2, as you mention. Google can at least get the pixel 2 into a major carriers shelves, I'm not so sure if getting the Essential onto Sprint shelves really counts for much.
It's a shame, but I definitely see this phone crashing and burning badly. Might be something nice to pick up 2nd hand for a couple hundred though, especially if it can be rooted.