OnePlus to focus on premium segment, remain online only

[rahul1117kumar]

Chinese smartphone maker OnePlus will stick to its online-only sales strategy, bucking the trend that has seen rivals such as Xiaomi and
LeEco increasing focus on brick-and-mortar stores in India for higher volumes. It has also exited the lower-priced segment to focus on the premium space, where it expects demand to jump in the next couple of years, CEO Pete Lau said.

OnePlus will also look at increasing local production gradually, keeping pace with its forecast that India’s manufacturing scale could reach global levels in around five years. This strategy is also in stark contrast to its rivals’ moves to raise local manufacturing sharply. The world’s fastest growing smartphone market currently contributes a third to the company’s global revenue.

"After five years, manufacturing capability of India will be booming, at a global level," Lau, 41, told ET. Increased local manufacturing will help the No 2 player in the above $400 segment in India lower the cost of devices and increase margins.

"Many suppliers from China have already come to India to begin their factories... to meet our requirements," he added.

The company's latest launch OnePlus 3T - the ramped up version of its popular OnePlus 3 - will be made in India from next quarter onwards. A large part of the Indian demand for the device will be met locally.

OnePlus had tied up with Foxconn for making the Rs 16, 999 priced OnePlus X in India last year, but discontinued it after the production cost turned to be higher due to lower efficiencies than that achievable with contract manufacturers in China.

"It was a trial run and the cost was not that low. We would like to continue local production that we have started now, and gradually manufacture here in India," Lau said.

OnePlus has since also decided to move out of the lower tier due to consumer feedback, and back into the premium segment, which has been its strong point and will now continue to be its core focus.

The top executive expects demand for smartphones priced in the Rs 20,000-Rs 35,000 range – the segment in which OnePlus operates – to increase in a couple of years from now, an outlook that has underlined the company’s view that it should stick to premium priced devices. Its devices are priced Rs27,999 upwards.

The company’s share in the above $400 segment (over Rs27,000) - has crossed that of Apple, displacing it from second position as of September end, data of Cybermedia Research, on the back of launch of OnePlus3 in June.

OnePlus’ share, has infact jumped to 18.7% to No 2 in the just ended quarter, from No 6 in April-June quarter when its share was only 2.7%. OnePlus is behind No 1 Samsung which had a 49.5% share, and is ahead of Apple which is at No 3 with 14.7% share, Lenovo’s 10% share and Oppo’s 2.2% share.

Unlike Xiaomi and even home-bred players like Micromax, OnePlus isn’t looking to invest in technology startups but may partner with apps for integration with the smartphone at a local level. Talks for such an integration were on with phone call identifier app TrueCaller, Lau said.

OnePlus smartphone: OnePlus to focus on premium segment, remain online only - ET Telecom

 

[rahul1117kumar]

OnePlus follows Apple model, to launch one flagship product every year

OnePlus has decided to stay away from the lower or mid-price segments after consumers rejected the OnePlus X, even though a large majority of the Indian smartphone market comprises of low-cost devices. CEO Pete Lau tells ET that international look and feel, and premium positioning, is important to the company – and it is what most users identify with. OnePlus feels it can also follow the
Apple model of launching one flagship a year, and still make money from selling phones. Edited excerpts:

Q: How would OnePlus be able to make a difference or create a niche for itself in India market, if its limited to one launch a year?

A: We only launch one flagship product every year. Apart from Apple, no other brand can do this. This shows our determination to the Indian market. We don’t have any middle or lower range priced cell phones, because for every product user experience is the most important and the users care about the design, the details. So, that is what we cater to the most - the details to perfection. This is what we excel the most and why we can succeed. Apple can do that, we can do that as well, and Apple makes more money than Samsung. So, if it’s just one flagship product, if the product is actually you know of the best of quality, we don’t need to be concerned of the market share.

Q: Where has the strategy over the last few years taken you in terms of your popularity? Are you there in top 5 in China?

A: Sales for us, even the market share for us is not the result that we are going after. It is actually results that comes along but what we care is about is the user experience. What the users think of us, if say for example after 3 or 5 years a customer will go to buy a smart phone and he think of OnePlus that is what we want and that is our success. So, for example 5 years later if an Indian customer says that time OnePlus makes the best android smartphones then that’s our success.

Q: Would you look at bringing down the price points as well as you go along with your products to cater to a segment which has larger volume share going forward?

A: No, we won’t. No, we will only cater to the premium market. We will not lower our price, because if it’s fast enough even after two years the premium market in India will be exponentially increased. Sales is not our target, we want to have the best user experience and the best comments/reviews and evaluations among our users.

Q: Is it also because you already burnt your fingers once with the not so successful run of OnePlus X?

A: That to some extent makes sense. Once in India, OnePlus users were asked users their opinions of OnePlus X. They said, OnePlus X is good, the configuration, the specifications and everything were good. But actually they still didn’t want to buy that because it doesn’t fit the positioning. So, they still want to purchase a higher priced flagship smart phones. From that moment, Pete decided we will never cater to the lower price range. So, ever since, we decided to discontinue OnePlus X series and only cater to the premium market.

Q: Is there conscious effort to tap the Rs 15,000 to 30,000 range which has fewer players to start with, but has a number of them focusing on it now?

A: The Rs 20,000 and 35,000, right now, is a small market, but after maybe 2 or 3 years it is going to expand. We are our competition and I have said to the product team that we should not look at other competitors.

Q: Do you plan to enter offline sales?

A: We will not do offline sales. We don’t do offline sales because that will be a huge cost. We always do online marketing as it is cost saving. So, right now our operational costs would be as high as those companies who do offline sales and our margin can actually cover other costs. We are making money and making, we would like to call, a healthy profit. And we don’t believe in the philosophy of losing money to sell phones.

Q: Would you look at content or localization tie-ups to differentiate yourself in this hypercompetitive market?

A: We will make or we will produce smart phone that is universally accepted, globalised and more international but having said that, for the users in India we would like give them better user experience which is more localised and services that would attract our users in India. For example, the Truecaller App, we are trying to use this example to learn from this how we are going integrate that into our smart phones.

Q: How critical is India as the market for OnePlus globally? What is India’s contribution to global sales?

A: India is as important as North America and Europe. It contributes to one third of the total revenue.

Q: Would you look at investing in technology companies which you can incubate and then if required, integrate with own smart phones?

A: We can corporate with those technology companies. There is no need for us to like to buy or acquire these companies.

Q: In China prices of display and memory components has gone up. As a response to that will OnePlus raise prices of its devices in India or maybe in other markets also?

A: So, because we have to take it into account the, increase of raw materials. So, we have actually given consideration to that. So for example, the price of OnePlus 3T has already taken into account the increase costs. Right now we don’t see prices of existing models to rise.

Q: Would manufacturing in India be more of a leverage in terms of your margins etc, to come into India give those products at slightly lower cost?

A: Manufacturing our smart phones in India will bring down the cost and increase our margins. But having said that we will take this step by step gradually because quality for us is the most important and actually we started cooperation with a third party in India last year. It’s just a small portion of all our smart phones, just like a trial round, but the cost was not that low. We will continue this trial round gradually to produce and manufacture more in India.
We would like to take this very slowly because we, you know, need to make sure that quality, they are what they do and their quality can meet our expectation.

Q: So, initial pilots that you have done, did it not meet with your quality expectations?

A: The pilot that we did actually did meet our expectation it is just that it is slow, efficient but slow because the supporting facilities here in India cannot be as good as those in China. So, that’s like the efficiency is slow so taking into account the efficiency we could like to take this step by step.

Q: Would you consider bringing your or convincing your eco system partners in China to come and set up shop in India, given the fact that government is sort of pushing local manufacture in India?

A: There are actually many suppliers who have already come to India to do, to open up their factories and plants to do that. Right now in India most of the companies or the suppliers cannot fulfil certain quality requirements. So, we turned to some Chinese companies and they came to India to open up their factories and plants to meet our requirement. It’s just like 20 years ago many companies from Hong Kong and Taiwan went to Mainland China to open factories or plants, which had actually helped to increase productivity of China. Its the same way many Chinese companies come to India to open up their subsidiaries, plants and factories in hope of increasing efficiency and productivity in India.

Q: Is there a long way to go before India can actually aspire to be a fully or to be a manufacturing hub for the world. Like China has been for years now?

A: After 5 years that the manufacturing ability of India will be booming. Within 5 years from now scale of manufacturing of India will actually come up to the global level.

Q: Would you like to expand your number of experience stores to more cities or towns?

A: If the Bangalore experience store is a success, we will definitely consider opening more experience stores like Delhi, Mumbai and other cities. So, 80% percent of our users in India are located in a top 10 cities.

OnePlus follows Apple model, to launch one flagship product every year - ET Telecom

 

[Siva]

Rahul bro, try to update your existing thread when you are sharing similar info.

 

[Bapun]

They are only want to do good in business hence such decision.