Loic Poirier, Archos CEO, wanted to demonstrate the abilities of Qechua Phone and Fieldbook F1, rugged Smartphones designed by Archos. While the Quechua phone survived the drop test just fine, it went wrong at the water test. When the glass with the phone in it was filled up with water, FieldBook F1 went off and didn’t want to switch on again.
Why did it happen? Well, the Quechua Phone is only rated IP54 which indicates the ability to resist any water splashing from any direction. So it is not made for going fully under water. Another possibility is that during the drop test, part of the back cover came off so the water could easily get in.
[Update] When we look closer to the video, we can see Quechua Phone is used for the drop test, while a different phone is used for the water test. It is the Fieldbook F1 phone prototype which is still under development and will launch in May. Fieldbook F1 has an 6 inch 1080p screen, Quad-core MT5689 processor@1.5Ghz, 2GB of RAM, 13Mpx back camera and should offer IP68 protection which should make it water and shock resistant. Archos France confirmed on their Facebook page that the phone used for the water test was not the Quechua Phone, but a prototype(of Fieldbook F1). The video clearly shows that Archos still has some things to improve in the phone design before the official product launch. 
Via: Reddit, Androidpolice, Archoslounge(Fieldbook F1 pictures)