Meet the new 'rebel' in the smartphone market
NEW DELHI: China-headquartered hardware startup OnePlus started out with the dream of creating the perfect smartphone - one that packs in high-end hardware, premium design and fluid software and at the same time, not burn a big hole in the pocket.
Pete Lau, vice president of premium Chinese handset brand Oppo, resigned from the company with an aim of turning this dream into reality. Nine months after the company's inception, it won't be wrong to say that the OnePlus One, the company's smartphone has been able to create some online buzz. Its invite-only order system has made it viral on the internet with fans and potential customers clamouring for invites on forums and social networks.
While the company is shipping the phone globally to markets like Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Italy, Netherlands, Portugal, Spain, Sweden, Taiwan, United Kingdom, and the United States, it's seeing a high degree of interest from customers in India. The company now has its eyes on the Indian market but is laying the groundwork as it feels the Indian market is much more complex than others.
Interacting with TOI Tech, Carl Pei, director, OnePlus global, said the company was scouting for head of its India operations and is also in talks with leading online retailers for an exclusive partnership to make the OnePlus available in the Indian market.
"We're looking for someone who would understand the market in a better way and relate to the culture. India may turn out to be one of the most important market for us in the long term and we want to ensure everything is in place before we launch the phone here. You get one chance to make a first impression and it's hard to fix things if you go wrong," said Pei.
OnePlus wants to setup a network of physical service centres in India. Right now its five global warehouses double up as service centres or just replacement hubs as it's mostly shipping replacements if users encounter hardware issues. Pei admits that at times the process is long and frustrating.
- The invite system
Currently, OnePlus has an invite-only system in place for orders. You can either fill up a form and wait for about a month to get an invite or ask a friend who acquired a OnePlus One phone for one. You can also post on the OnePlus forums or participate in contests and give-aways to get your hands on one. Interestingly, there's an aftermarket for invites. Pei informed that people were selling invites on eBay for as high as $200. In fact 9-10% of all invites are on eBay.
An invite is usually valid for 24 hours and you get a day's grace to place your order. This allows OnePlus to clear the inventory in 48 hours of its arrival in the warehouses. Not all invites are valid for 24 hours and the company is testing user behaviour to evolve further as it increases volumes.
It has also announced that it will introduce pre-orders by October-November in addition to the invite system.
For India OnePlus is still assessing if it will have the same invite-only buying system.
"The reason for the invite system was to control the inventory and to create a better user experience. We're going to look at what we learnt from the invite system, in addition to flash sales and pre-orders and see what fits the Indian market."
- Meeting increased demand
There's been a lot of backlash from people who've been struggling to get their hands on the OnePlus One after the company failed to meet demand after initial round of shipments.
Pei told us that some key components of the phone take a long time to reach production facilities from suppliers. The longest period for a component to be delivered is three and a half months so the company needs to know how many units it wants to produce three and a half months from the current date when it places orders. " This is also the reason why three and a half months after the launch we didn't have enough units. But at the same time we can't take a risk and go overboard. Hardware is complex; we had to control our risks - product risks and inventory risks."
"For a small startup like OnePlus which makes little or no money from hardware, it's important to be safe than sorry. When you have no margins and you start producing a lot of phones that you can't sell, you can be bankrupt. We would rather be conservative in our demand estimates than burn our hands and shut shop," Pei reiterated.
OnePlus is a lean company with around 40 employees. While a majority of the employees used to work at Oppo, some executives have moved in from Xiaomi and Tencent. Pei told us that a third of the team is European an a third is North American, while the rest are from China.
The company has 15 people looking after post-sales support and it will soon announce a senior executive to lead its CS team.
- Revenue stream
Interestingly, just like Xiaomi, OnePlus makes no money from hardware. It is able to price the phone close to its production cost by cutting the middlemen. The company doesn't advertise and sells exclusively through the online channel.
According to Pei, for the first two years, the company's goal is to get the product into the hands of the people. It wants the phone to speak for itself and leverage the positive word of mouth. It aims at making money by increasing volumes over that period of time.
OnePlus has set-up its software team and apps and services will be the second revenue stream, the other one being accessories. The company will soon introduce earphones and power banks.
It is not looking at expanding into other smartphone and device segments at least this year as it wants to focus on its flagship smartphone. It has already started working on the OnePlus Two which will debut in the second quarter of 2015.
- The Oppo connection
Pei seemed dismayed with some media outlets referring to OnePlus as an Oppo subsidiary after documents showing Oppo as the sole owner of the company emerged online.
According to Pei, Oppo and OnePlus have a common investor in Oppo Electronics, which also owns the Chinese mobile manufacturer with the same name. He informed that the company will soon have another investor when it raises funding, by end of the year or beginning of 2015.
However, OnePlus One is currently manufactured in Oppo's production lines in Dongguan, China.
- The sexist campaign controversy
OnePlus launched a contest in which women were asked to submit a photo of themselves with its logo drawn on a piece of paper or themselves, to win invites to buy the phone. The campaign drew a lot of flak for its sexist rules and the company had to cancel it.
"The original idea was not bad. There are girls who want the phone but don't have the time to participate in forums or play contests, and we wanted them to experience the phone. I admit the execution was really bad and the rules made it sexist. I take full responsibility for it and apologise. We need to be clear and professional and this was a misstep on our part," said Pei.
Pete Lau, vice president of premium Chinese handset brand Oppo, resigned from the company with an aim of turning this dream into reality. Nine months after the company's inception, it won't be wrong to say that the OnePlus One, the company's smartphone has been able to create some online buzz. Its invite-only order system has made it viral on the internet with fans and potential customers clamouring for invites on forums and social networks.
While the company is shipping the phone globally to markets like Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Italy, Netherlands, Portugal, Spain, Sweden, Taiwan, United Kingdom, and the United States, it's seeing a high degree of interest from customers in India. The company now has its eyes on the Indian market but is laying the groundwork as it feels the Indian market is much more complex than others.
Interacting with TOI Tech, Carl Pei, director, OnePlus global, said the company was scouting for head of its India operations and is also in talks with leading online retailers for an exclusive partnership to make the OnePlus available in the Indian market.
"We're looking for someone who would understand the market in a better way and relate to the culture. India may turn out to be one of the most important market for us in the long term and we want to ensure everything is in place before we launch the phone here. You get one chance to make a first impression and it's hard to fix things if you go wrong," said Pei.
OnePlus wants to setup a network of physical service centres in India. Right now its five global warehouses double up as service centres or just replacement hubs as it's mostly shipping replacements if users encounter hardware issues. Pei admits that at times the process is long and frustrating.
- The invite system
Currently, OnePlus has an invite-only system in place for orders. You can either fill up a form and wait for about a month to get an invite or ask a friend who acquired a OnePlus One phone for one. You can also post on the OnePlus forums or participate in contests and give-aways to get your hands on one. Interestingly, there's an aftermarket for invites. Pei informed that people were selling invites on eBay for as high as $200. In fact 9-10% of all invites are on eBay.
An invite is usually valid for 24 hours and you get a day's grace to place your order. This allows OnePlus to clear the inventory in 48 hours of its arrival in the warehouses. Not all invites are valid for 24 hours and the company is testing user behaviour to evolve further as it increases volumes.
It has also announced that it will introduce pre-orders by October-November in addition to the invite system.
For India OnePlus is still assessing if it will have the same invite-only buying system.
"The reason for the invite system was to control the inventory and to create a better user experience. We're going to look at what we learnt from the invite system, in addition to flash sales and pre-orders and see what fits the Indian market."
- Meeting increased demand
There's been a lot of backlash from people who've been struggling to get their hands on the OnePlus One after the company failed to meet demand after initial round of shipments.
Pei told us that some key components of the phone take a long time to reach production facilities from suppliers. The longest period for a component to be delivered is three and a half months so the company needs to know how many units it wants to produce three and a half months from the current date when it places orders. " This is also the reason why three and a half months after the launch we didn't have enough units. But at the same time we can't take a risk and go overboard. Hardware is complex; we had to control our risks - product risks and inventory risks."
"For a small startup like OnePlus which makes little or no money from hardware, it's important to be safe than sorry. When you have no margins and you start producing a lot of phones that you can't sell, you can be bankrupt. We would rather be conservative in our demand estimates than burn our hands and shut shop," Pei reiterated.
OnePlus is a lean company with around 40 employees. While a majority of the employees used to work at Oppo, some executives have moved in from Xiaomi and Tencent. Pei told us that a third of the team is European an a third is North American, while the rest are from China.
The company has 15 people looking after post-sales support and it will soon announce a senior executive to lead its CS team.
- Revenue stream
Interestingly, just like Xiaomi, OnePlus makes no money from hardware. It is able to price the phone close to its production cost by cutting the middlemen. The company doesn't advertise and sells exclusively through the online channel.
According to Pei, for the first two years, the company's goal is to get the product into the hands of the people. It wants the phone to speak for itself and leverage the positive word of mouth. It aims at making money by increasing volumes over that period of time.
OnePlus has set-up its software team and apps and services will be the second revenue stream, the other one being accessories. The company will soon introduce earphones and power banks.
It is not looking at expanding into other smartphone and device segments at least this year as it wants to focus on its flagship smartphone. It has already started working on the OnePlus Two which will debut in the second quarter of 2015.
- The Oppo connection
Pei seemed dismayed with some media outlets referring to OnePlus as an Oppo subsidiary after documents showing Oppo as the sole owner of the company emerged online.
According to Pei, Oppo and OnePlus have a common investor in Oppo Electronics, which also owns the Chinese mobile manufacturer with the same name. He informed that the company will soon have another investor when it raises funding, by end of the year or beginning of 2015.
However, OnePlus One is currently manufactured in Oppo's production lines in Dongguan, China.
- The sexist campaign controversy
OnePlus launched a contest in which women were asked to submit a photo of themselves with its logo drawn on a piece of paper or themselves, to win invites to buy the phone. The campaign drew a lot of flak for its sexist rules and the company had to cancel it.
"The original idea was not bad. There are girls who want the phone but don't have the time to participate in forums or play contests, and we wanted them to experience the phone. I admit the execution was really bad and the rules made it sexist. I take full responsibility for it and apologise. We need to be clear and professional and this was a misstep on our part," said Pei.
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