Do you have the ESP boards installed?
Installing with Boards Manager
Starting with 1.6.4, Arduino allows installation of third-party platform packages using Boards Manager. We have packages available for Windows, Mac OS, and Linux (32 and 64 bit).
Install Arduino 1.6.8 from the Arduino website.
Start Arduino and open Preferences window.
Enter http://arduino.esp8266.com/stable/package_esp8266com_index.json into Additional Board Manager URLs field. You can add multiple URLs, separating them with commas.
Open Boards Manager from Tools > Board menu and install esp8266 platform (and don’t forget to select your ESP8266 board from Tools > Board menu after installation).