A Company Analysis Report

Of

OnePlus

Managerial Economics Project

Marketing Campaign Evaluation
SUBMITTED BY
QAZI M FAHEEM
PGDM IB-I
Introduction
In February 2016, Carl Pei, co-founder of the Shenzhen-based technology start-up,
OnePlus, announced that the company’s new flagship smartphone OnePlus 3 would
be launched by the end of the second quarter (June) of 2016. He said the company’s
fourth smartphone model with its new design would captivate young tech
enthusiasts, much like its predecessors. Since its debut in 2013, OnePlus had grabbed
the headlines for delivering smartphones with flagship specifications at significantly
lower prices than that of its rivals. The co-founders of OnePlus Peter Lau (Lau) and
Pei emphasized the “Never Settle” motto of OnePlus, which aimed at providing the
best possible technology to users globally by creating elegantly designed devices
with premium build quality and high performance hardware. The business model of
OnePlus was built around razor-thin margins. The company employed an
unconventional invite-only system that limited buyers to those who had received an
invite from the company directly or from someone who had already purchased the
device.
History
OnePlus was founded on 16 December 2013 by former Oppo vice-president Pete
Lau and Carl Pei. According to the Chinese government's documentation, the only
institutional stockholder in OnePlus is Oppo, Although Lau initially denied that
OnePlus was a wholly owned subsidiary of Oppo, upon release of the regulatory
filings they admitted that they are owned by Oppo and are “in talks with other
investors” (although nothing has been announced to date). The company's main
goal was to design a smartphone that would balance high-end quality with a lower
price than other phones in its class, believing that users would “Never Settle” for
the lower-quality devices produced by other companies. Lau explained that “we
will never be different just for the sake of being different. Everything done has to
improve the actual user experience in day-to-day use.” He also showed aspirations
of being the “Muji of the tech industry”, emphasizing its focus on high-quality
products with simplistic, user-friendly designs. Continuing Lau's association with
the platform from the Oppo N1, OnePlus entered into an exclusive licensing
agreement with Cyanogen Inc. to base its products' Android distribution upon a
variant of the popular custom ROM Cyanogen Mod and use its trademarks outside
of China.
The company unveiled its first device, the OnePlus One, on 23 April 2014. In
December 2014, alongside the release of the OnePlus One in India exclusively
through Amazon, OnePlus also announced plans to establish a presence in the
country, with plans to open 25 official walk-in service centers across India.
OnePlus made its products available in Southeast Asia for the first time, partnering
with Lazada Indonesia on 23 January 2015 and is expected to expand during this
year throughout the region.
In April 2014, OnePlus hired Han Han as the product ambassador in mainland
China.
On 9 March 2014 the company decided to expand its operations to all European
countries except Switzerland (although OnePlus devices can be purchased in
Switzerland via local online retailers), serving now 43 countries and regions all
over the world. As of March 2016, OnePlus serves for the following countries and
regions: Austria, Belgium, Bulgaria, Canada, Mainland
China, Croatia, Cyprus, Czech
Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hong
Kong, Hungary, India, Ireland, Israel, Italy, Latvia, Lithuania, Luxembourg, Malta,
Malaysia, Netherlands, Poland, Portugal, Romania, Saudi
Arabia, Singapore, Spain, Slovakia, Slovenia, Sweden, The United Arab
Emirates, The United Kingdom and The United States of America.

Products
OnePlus has manufactured six devices:

OnePlus One: (codename "bacon"; unveiled on 23 April 2014; international

release on 6 June 2014). The company's first product was the highly anticipated
OnePlus One. It was unveiled on 22 April 2014, and was touted as the "2014
Flagship Killer." The One had comparable, and in some ways better, specifications
to other flagship phones of the year, while being sold at a significantly lower price
at $299 for the 16 GB version or $349 for the 64 GB version. The One also
debuted the infamous invite system, which ensured that the company didn't take
more orders than it was capable of shipping.
The OnePlus One had several minor hardware issues at launch, which reportedly
was corrected in later batches of the phone.
OnePlus 2: (codename "oneplus2"; unveiled on 27 July 2015; international release
on 11 August 2015). The OnePlus 2 was the successor to the company's highly
successful first phone. It was unveiled a little over a year after the One, on 27 July
2015. It was highly promoted as "2016 Flagship killer". There were very high
expectations for the second generation OnePlus phones, partly because of the
company managed to create a big amount of hype for the upcoming phone.
One of the marketing channels used, was YouTube tech reviewer MKBHD, who
was sent a unit, which he covered in detail leading up to the launch.
The OnePlus 2 had specifications comparable to other flagship phones of the time,
including the highly criticized Qualcomm Snapdragon 810, though OnePlus had
decided to leave out an NFC chip, as it didn't see mobile payment being an essential
feature at the time. The phone was also one of the first Android devices to sport
a USB type C port over the older micro USB port.

OnePlus X: (codename "onyx"; unveiled on 29 October 2015; international release

on 5 November 2015). The OnePlus X was OnePlus entrance to the budget phone
market, at 5 inches instead of the One and 2's 5.5 inches. The phone was unveiled
on 29 October 2015. The phone was sold at $249, and consisted mostly of the same
internal components as the year and half old OnePlus One, but had
an AMOLED display.
OnePlus 3: (codename "oneplus3"; unveiled on 14 June 2016; international release
on 14 June 2016). The OnePlus 3 was unveiled on 14 June 2016. The 3 was the
company's first "metal unibody" phone. The phone launched with
a Qualcomm Snapdragon 820, 6 GB of RAM and 64 GB of UFS 2.0 storage. The
phone was well regarded amongst critics, mostly for its low price and high
specifications.

OnePlus 3T: The OnePlus 3T was unveiled on 15 November 2016 as a minor

upgrade to the still relatively new OnePlus 3. The upgrade consisted the use of a
newer SoC; the Qualcomm Snapdragon 820 was replaced with the Snapdragon 821.
Also introduced were a higher-capacity battery, 64 or 128 GB of storage and 16 MP
front facing camera. The phone launched in the US on 22 November 2016 and in
Europe on 28 November 2016.

OnePlus 5: The OnePlus 5 was unveiled on 20 June 2017. It launched with

a Qualcomm Snapdragon 835, a dual-lens camera setup, up to 8 GB RAM, and up
to 128 GB of storage. It was released in two colors: Midnight Black and Slate Gray.
A third limited edition color, Soft Gold was released on 7 August 2017.
OnePlus Competitive Set

Leadership Employees Revenue

OnePlus 2,640 $300M

Samsung 454,144 $173.2B

Motorola 1,745 $6.3B

Apple 116,000 $224.2B

HTC 17,575 $5.9B

LG 82,000 $54.7B

Sony 125,300 $68.7B

Huawei 170,294 $15B

Pricing Strategy
OnePlus offered devices with an industry leading design, superior build quality, and
top-of-the-line specifications at a disruptive price. The phones pricing appealed to
those seeking a high-end device without having to spend too much on it. According
to some industry observers, OnePlus kept its pricing strategy very competitive and
was not worried about costs while manufacturing devices. After adding up all the
costs, the start-up retained a small margin for itself in order to keep its operations
running and passed on the rest of the savings to the customer in the form of low
prices, they added. OnePlus set the lowest feasible price for its devices in each
geographical market. The prices of OnePlus devices were different in each country
depending on operating costs, taxes, and other factors.

OnePlus 5 is officially out for India. Just like everything else, the India pricing of
the phone didn’t deviate from what was predicted. OnePlus 5 with 6GB RAM and
64GB storage starts at Rs 32,999 and the 8GB RAM and 128GB storage variant is
priced at Rs 37,999.

Also for the first time in India, OnePlus is crossing the Rs 35,000 price mark with
its new smartphone. But pricing wasn’t the only thing that changed with the coming
of the OnePlus 5. The big scale launch event for the OnePlus with fans and a bevy
of celebrities attending as well as Rs 1crore prize made it clear that the brand is
aiming big in India. OnePlus doesn’t want to be seen as a start-up anymore, it’s a
full-fledged brand now with fans lining up to buy its phone, just like they do for
Apple’s iPhone Well, at least that’s the perception OnePlus wants to sell.

Of course, OnePlus isn’t the only brand in India that has held events with fans.
Xiaomi has made fan events a big deal in India, though the last one in Delhi didn’t
really go to plan. OnePlus, though, charged fans Rs 999 to attend the launch for a
seat in the NSCI Dome to watch the unveiling of the phone.

Clearly, the company is positioning itself as the ‘flagship’ brand to be reckoned with,
in the Indian market. Sure the majority of volume is in the Rs 10,000 to Rs 15,000
segment, but OnePlus has always been about this price band. Right from the OnePlus
One, the brand has pitched itself as one promising an affordable flagship, without
the flagship prices. Now, the OnePlus 5 wants to cement that position.

According to data firm IDC’s stats, in Q1 2017, the average selling price of
smartphones in India was $155, and nearly two-thirds of smartphones being sold in
the country are from a China-based vendor. The price range averages between $100-
200, according to IDC. Essentially one-third of the market in India is above the $200
price mark, and OnePlus is playing in that category.

In December last year, it was reported by IDC that OnePlus was number three in the
premium segment market in India, which is any smartphone above $300 price mark.
No wonder, OnePlus CEO Pete Lau was quoted as saying last year that India might
end up surpassing the China market in terms of volume for the company. Though of
course, there have been no official numbers for India yet.

OnePlus 5 launch makes it clear the company has no plans of holding back punches
in India. The grand event, inviting fans, all of this is to drill the message that the
brand has arrived. Also not to be missed is that fact that while the global launch was
a live streamed event, here the company CEO was in front of the crowds himself.

Then there’s the issue of pricing. If you look at the specifications of OnePlus 5, it is
essentially the most affordable smartphone in the market sporting flagship level
specifications. This is right now the cheapest smartphone running the latest
Qualcomm Snapdragon 835 processor. HTC U11, which also has this processor,
comes at a price tag of Rs 51,990, while the Sony Xperia XZ Premium sports an
even more exorbitant tag of Rs 59,990.

In a market like India, where a lot of the conversation is driven by talk around
specifications, OnePlus has played the card right. There’s a whole lot of RAM, 8GB
on board the more expensive version, and it will grab eyeballs. Sure most of us might
not have any clue of why that 8GB RAM is needed on a smartphone. Then there’s a
dual camera with unique 16MP +20MP combo.

OnePlus has brought what can only be described as ‘insane’ specifications, at a

nominal pricing. For the Indian audience that wants the most out of every penny,
this as a strategy is good enough to grab attention. Now whether it converts into
volume is what remains to be seen.

Marketing Strategy
Technology is the new rock ‘n roll hall of fame. Nowhere was this more apparent
than at the recent OnePlus India launch of OnePlus 5 – the new flagship smartphone
– from a Chinese smartphone maker that began operations just four years back. Since
2013, OnePlus has managed to release six premium smartphones – OnePlus One,
OnePlus Two, OnePlus X, OnePlus 3, OnePlus 3T and OnePlus 5 – at non-premium
prices.

As one of six co-founders Carl Pei, said in an interview in June 2017, “In the $400-
plus space, we are already No. 2. Last year, we were also profitable.”

After capturing 19 countries mostly in established markets such as US, China and
Europe, the OnePlus India journey began a year later in December 2014. OnePlus
India has had a meteoric and challenging journey, as compared to its European and
East Asian counterparts. Yet, the company has managed to ink its name in the annals
of history, joining such premium smartphone makers such as Apple and Samsung
whose phones retail for almost twice the amount of what you pay for an OnePlus
handset.
In fact, according to a Trak.in report, by 2015 OnePlus One had become extremely
popular in East Asia, Europe, and North America with the total shipments
amounting to 39%, 32%, and 22% respectively of the total sales.

In 2013, the global smartphone market was first beginning to see signs of an
explosion – with emerging economies such as India, Indonesia, Malaysia and
Thailand aggressively adopting a mobile-first strategy. Two people sitting in a car
in traffic – Carl Pei (ex-CEO of smartphone maker OPPO) and Pete Lau – and
working on their iPhones were struck by an idea of building a premium smartphone
like the iPhone but available at affordable prices.
To this end, the founders first launched a tech-focused OnePlus forum, to understand
what users in their community wanted from a premium phone. In fact, to this day,
the user community plays a big part in how OnePlus releases updates. Thus, began
the journey of Chinese smartphone brand – OnePlus which was formally launched
in December 2013 in Shenzhen, China. The company is headquartered in
Guangdong and operates in about 35 countries globally including Europe, US, China
and India.
“Our value proposition has always been to make OnePlus products future-ready. Our
philosophy revolves around giving our users more than what they are looking for.
And to do so in a cost-efficient manner, which was why OnePlus will always be an
online brand first and foremost,” begins Vikas Agarwal, General Manager at
OnePlus India, headquartered in Bengaluru.
One of the core differentiators of OnePlus was the way they launched the first
smartphone OnePlus One back in 2013. An invite-only launch with the phone
available exclusively on the OnePlus website, reminiscent of the early days of
Facebook and Gmail, for ardent users who had followed the brand. The markets they
targeted were Europe, East Asia and the US.
The idea paid off handsomely and OnePlus became an instant viral, global
phenomenon. And with premium specs (3GB RAM, 32 GB and 64 GB storage, 13
MP front-facing cameras and 5.5” Corning Glass screens in Sandstone Black and
Grey), the company was able to expand sales to 19 countries by April 2014.

The success of the startup stemmed from the fact that it was enthusiastically accepted
in Europe – a mature, tech-savvy and operator-driven market. The way Vikas
explains it, “These markets which already have established names such as Apple,
Samsung dominating with the audience are hard to break in. But the OnePlus team
consisted of 19 different nationalities who understood what these markets needed
and focused on core tech users. That helped in us reaching 19 European and US
markets combined by April 2014.”

Also, OnePlus had a marketing rule that it had followed in each of these 19 markets.
To present a mid-range costing phone ($350 and above) with the specs of a premium
handset exclusively on their own website. The idea, as Vikas states, was to have a
seamless online to offline experience for their customers. Everything, from
marketing, to sales, to after sales was end-to-end handled by OnePlus in each
country.

But, all this changed, when it came to India.

Turning Its Gaze towards India: The Second-Most Viable
Market after China
Vikas joined the company as OnePlus’ first employee in India in December 2014.
He had passed through the IIT+IIM rigmarole and even worked in the PE/investment
sector for a while. Entrepreneurship soon took over and he started a hyperlocal
startup which folded up in 2013. After a brief stint with the Ibibo Group managing
their ecommerce entity, Vikas tried for the OnePlus position that had opened when
the company first thought of entering India. This was back in August 2014.

“OnePlus launched formal operations in December 2014 and I have been part of the
journey since day one,” he shares with a fond smile.

Data played a crucial role in how OnePlus takes steps forward in terms of
geographical expansion, as most of the user information available on social media
and the OnePlus community forum is analyzed and taken into account. So, one of
the analyses showed that a large part of the OnePlus’ website traffic was coming
from India by April 2014. “OnePlus had no presence whatsoever in India back then.
No promotions were taking place too. Yet, India was ranking in the top seven
countries in terms of website traffic.”

Vikas describes the Indian buyer behavior as users using a US-based address,
ordering the phone through the invite and jailbreaking it to be used in India. “When
we analyzed this kind of user behavior, we refined our core focus to include India.”

Product Availability
Exceptions Made For India: Partnering With Amazon
Trust is a big factor in India, especially when it comes to ecommerce which has only
recently seen country-wide acceptance. And it does have to be noted that fellow
Chinese smartphone maker Xiaomi, which also entered India at roughly the same
time went with homegrown ecommerce website Flipkart as part of its launch
strategy.

In 2014, OnePlus as a brand name was unknown to the general population. But the
market had been analyzed enough that it warranted looking at a differential approach
to brand-building. The marketing team at OnePlus remained unconvinced that the
website-only selling model would work in a country as diverse as India. Enter
Amazon India, which had also started out a year before in June 2013.
“Amazon had global clout and presence, something the homegrown ecommerce sites
lacked. Plus, they were starting out in India like us. We looked at the smartphone
market in India and all the brands were advertising across platforms – Flipkart,
Snapdeal etc. The sites did not appeal on the exclusivity, premium smartphone-front,
something OnePlus insists on.”

Due to this combination of a global presence, trust, and reliability factor OnePlus
became the first mobile brand to exclusively launch on Amazon India at the time.

Of course, the invite-only strategy was incorporated into the Amazon fold, the first
phone was launched on December 2, 2014 and were sold out on Day 1. While Vikas
declined to give actual figures, this Trak.in report managed to eke out the sales
breakdown. The company sold 850K-950K units all across the world declaring
revenues of $300 Mn in 2015.
For India, the company claimed to have shipped 7% of its total phones for 2015.
Thus, it can be concluded that about 65,000 OnePlus One handsets were sold in total.

The launch was also successful enough for Indian operations to warrant their own
office. So, the global OnePlus team set up an office in Bengaluru considering it as
the most important market for them.

Issues Plaguing OnePlus India: Then and Now

At the outset, OnePlus faced a legal controversy when it first entered India. The
complainant was Micromax, which claimed that the company was violating
exclusivity clauses with Cyanogen Mod OS (the mobile software which OnePlus
One runs on). The court order locked sales as well as locked capital, giving the
company pause in the initial months of launch.

Eventually, the matter was resolved when the Delhi HC ruled in favor of a non-
exclusivity clause and Micromax ended up withdrawing the case in July 2015.

After sales service and customer care was another sore area of operations for
OnePlus India. Their global customer care service has been outsourced to a global
partner. The idea behind this move was that the smartphone issues do not vary from
region to region, in the mature markets. India, however, was another ballgame
altogether.

“When we entered India, our original desire was to open a customer care center in
every town in India. But two things stopped us – the quality of these centers could
not match global standards. Being a small company, spare parts inventory became
a problem,” Vikas is candid enough to admit. The core issue for poor after sales
could be traced back to a few factors.

The phone was priced affordably but the customers expected the kind of exclusive
service that would be given for a premium smartphone – like say at an Apple retailer
outlet. The staff was untrained and the centers were placed in remote locations as
part of multi-brand outlets in strip malls. During the OnePlus 5 launch, Vice
President Kyle Kiang spoke of CEO Peter Lau’s experience trying to find a
OnePlus customer care center in Delhi and unable to do so. “He had to drive around
for hours and ended up in a remote corner of Delhi, somewhere. This was bad for
business.”
This forced the company to once again come up with an India-specific solution for
customer care. Which included placing company-managed exclusive centers in
premium locations in Bengaluru, Delhi, and Mumbai. The other thing they did was
tying up with a German and UK-based servicing company that has satellite reach all
over India. “We have also internally set a TAT (Turnaround Time) of less than one
hour. 90% of customer complaints get resolved within the TAT.”

Switching From Cyanogen to Oxygen OS

Cyanogen was an open source platform that could be customized by Android-facing
OEMs. It offered more than stock Android options in terms of design interface and
the overall UI/UX experience. According to Vikas, OnePlus was the first OEM to
sign a partnership with CyanogenMod founder Steve Kondik. But, after the
company faced copyright infringement and breach of contract issues in India, they
started building their own OS viz. Oxygen Mod – which was rolled out in community
beta in February 2015.

Incidentally, Cyanogen formally shut down operations in December 2016, after co-
founder Steve Kondik released a blogpost chronicling the problems facing the open
source platform.

With the launch of OnePlus 2 in 2015, Oxygen OS too was rolled out on all phones.
As Vikas says, “We focus on solving one core customer problem with all our phones.
If OnePlus One was focused on providing a premium hardware experience, OnePlus
Two was all about the software. Oxygen was stable, robust and feature-ready.”
Competing With a Plethora of Smartphone Brands, Taking
OnePlus India Offline
Let’s face it. The smartphone market in India and the world over is saturated. In fact,
it would not be hyperbolic to say that the average smartphone user is spoilt for choice
when it comes to buying the perfect handset, both due to the presence of an infinite
number of smartphones appealing to different price pockets, but also due to the fact
that online websites offer a dearth of choices. There are non-premium brands such
as Micromax, Intex, Lava, Spice being manufactured in the country itself,
international competition for OnePlus ranges from brands such as Apple, Samsung,
Xiaomi, OPPO, Lenovo, Motorola, Gionee to name just a few.

Globally in Q1 2017, Apple and Samsung combined held about 32% of total market
share followed by Chinese smartphone brands – Huawei, OPPO, and Vivo which
claimed 9%, 8.7%, and 6.8% of the market, respectively.

With the notable exception of Apple, which has stuck to its end-to-end premium
phone experience at premium prices, the rest of the brands offer a mix of models and
features for discerning users. In such an overflowing market, price points is a key
differentiator, since, OnePlus offers premium features for a mid-range price. For
instance, the OnePlus 3T (INR 27,999), a bestseller on Amazon India came equipped
with a unique Dash Charging feature that allows for the fastest, full battery charging
in the shortest span of time.

The other specs (6GB RAM, 850 Snapdragon Processor, 16 MP front-facing

camera) that OnePlus 3T comes with are being provided by such premium models
as the iPhone 6 and iPhone 6s and Samsung Galaxy S7 – both of which retail at
upwards of INR 52,000 at the minimum.

Carl Pei defended the OnePlus selling philosophy with, “I think we are so small, that
we are not going to be disruptive. It’s only our own mistakes that will lead to our
downfall. It’s not what other people are going to do.”

Peter Lau too talked about how the company plans on focusing on exactly one
product. And each feature of this one product – camera, smoothness and system and
battery has to be the best offered at non-premium prices.

“Other brands make 10 different models a year. But if you create 10 different
models, how can you be focused on creating the best possible product every year?
When I go to sleep, I only think of my one next product. It’s difficult for others to
compete with that.”

Making the Jump to an Omnichannel Retailing Experience

But, like every other online brand OnePlus has now entered the offline vertical too
– trying to offer an omnichannel experience and capture a larger chunk of the 500
Mn smartphone user market that India has become. OnePlus’ retail strategy is like
every other online ecommerce brand. Gain critical mass by increasing user
stickiness, brand loyalty and then parlay that into building a considerably different
offline retail experience.

The site of its first offline or ‘in-store experience’ is Bengaluru – where the company
launched a store in centrally-located Brigade Road. “It took us more than a year to
lock the space, the concept of the flagship store down. Bengaluru was our chosen
ground because it is our biggest market. It’s the undisputed tech capital market and
has our biggest community in terms of sales.”

The flagship store opened in August 2016 and claims to be more than a store that
displays the OnePlus phones and accessories. It aims to offer an experience to the
user, bring additional value add to the tech community. For instance, the entire first
floor has a 50-60 seating capacity and is a potential venue for TedX Talks.
As all retail stores are all about the sales, what numbers does the OnePlus store
declare? While Vikas is reluctant to reveal any actual numbers, he does disclose that,
from a Bengaluru perspective they ‘have been able to recover costs on a monthly
basis. And that the sales volume is easily 5x-10x compared to an average smaller
mobile store.’

Which brings us to the stiffer competition that OnePlus faces. Yes, the brand has a
considerable presence on Amazon India but in the offline world, OnePlus jostles for
user attention and floor space with multi-brands, more established chains such as
Mobile World, The Mobile Store as well as any number of smaller, non-
branded smartphone retailers. How does it plan on staying ahead of the curve and
entice the Indian consumer here? To which Vikas says categorically,

“The OnePlus store was not conceptualized from a sales perspective. We are looking
to increase our coverage and brand awareness. Complement the online-first strategy,
which consolidates all regions under the Amazon India umbrella.”

Perhaps, it is for this reason that they have also opened a mini ‘experience zone’ at
DLF Mall in Saket, Delhi. “We want to answer questions such as what questions are
our visitors are asking. How many people are visiting and what reason do they have
to do so?”

2017, OnePlus 5 Launch, And Making India the Core Focus

OnePlus 5 was recently launched on June 22, 2017 in Mumbai with much fanfare.
The company has even picked Amitabh Bachchan to be the brand ambassador in
order to emphasize the trust/authenticity and storytelling factors.

While the new phone retails at INR 32,000 for the 64GB handset and again boasts
of features that can apparently best the Apple iPhone 7, the model has come under
considerable flak from acknowledged tech geeks, namely for the zero innovation in
terms of camera, the overinflated use of RAM space 6 and 8 GB RAM for the 64GB
and 128GB handsets respectively.

I was curious enough to ask about why the company launched the OnePlus 5 instead
of the OnePlus 4, the obvious numbering choice and Vikas chuckles. “We, as a
company, are a superstitious lot. So no, 4. We had the 3T and went onto 5.”
In a recent interaction with Business Today, Peter Lau the new CEO of Business
Today said that when he spoke internally to the OnePlus global team, they said that
5 is the number they liked and they will use that, the same as with OnePlus 3T. “Also,
a lot of Chinese customers don’t like ‘4’ because it has the same pronunciation in
Chinese as death.”

While the phone has its share of detractors, it does enjoy unprecedented popularity.
As demonstrated by Arun Shrinivasan, Head Of Category Management at Amazon
India at the time of launch. He stated that the website had logged 1 Mn Notify Me
emails as of 2 pm, on the day of the launch, in anticipation of when the phone would
go on sale. For the uninitiated, Notify Me emails on Amazon are ways for people to
keep abreast of unavailable or coming soon products. The OnePlus 5 currently holds
the #1 rank in Amazon India’s Electronics category and #2 in Electronics, Mobiles
and Tablets, Smartphones sub-categories.

2017 Is India-Focused
That OnePlus is serious about India is believed by the fact that the latest flagship
model has been launched in India along with the other global markets – namely
China and Europe. “2017 is India-focused,” Vikas emphasizes. “Finally, the
discomfort of shopping online has been replaced with buyer-readiness. People are
trusting in us, so we’re doubling down on our efforts here.”

A key stat that Vikas shares is that in terms of adoption, 90% of European markets
can afford the device (retailing at around $492 for the 64GB OnePlus 5). In India,
this number is 19%. And yet, the sales match with each other – given that Apple does
not enjoy as much popularity in India and Samsung has been dethroned by Xiaomi,
OnePlus and similar brands.

So, how do they plan on taking OnePlus to the discerning Indian smartphone user?

“We are an urban brand, selling online. So we are first going to focus on the big
cities until saturation is achieved.” He mentions Delhi, (largest city in India and the
capital), Bengaluru, and Mumbai as the markets that the company plans on capturing
in 2017 through online pushes as well as providing an after service experience that
match’s sales performance. For offline, the mini experience zones is the strategy the
company aims to employ.

The OnePlus Core Vision: Breaking Down ‘Never Settle’

The company boasts of a total of 1500 employees based out of China and India. But,
in comparison to other mobile manufacturing behemoths such as Apple, Samsung,
Xiaomi, OPPO, Google’s Motorola the company is small. Both in terms of
employees as well as the practices the OnePlus team has adopted. The lean and agile
startup mindset still prevails in the company majorly when it comes to major
decisions.

“In the hardware business, inventory is the most major challenge for us. It takes up
a chunk of the capex (capital expenditure). It’s always balancing between too much
and too little – demand and supply. We adopted a new seller strategy that of
exclusivity, to rationalize demand.”

Vikas decodes this cryptic statement: for one, the invite-only program was email-
based.

Plus, there was a two-day expiration date on the email invite so they could not be
hoarded for months together. And lastly, the company relied extensively on the
OnePlus community and word-of-mouth to generate awareness. They still follow the
practice of publishing a weekly update on Saturday in the OnePlus community forum
in order to maintain proximity with the users, while keeping a pulse on what the
users wanted.

All the above factors that of having limited invites which would expire in a
limited time while being proactive with interested users, basically led to
analyzing user behavior (number of invites equal to handsets produced).
Manufacturing supply could begin to keep up with demand, because of the limited-
time factor. Demand started getting subsidized while supply could catch up with
demand.

In fact, as Peter Lau claims, they still take about four weeks to ship to Europe even
in 2017.

A basic lean startup strategy continues to be employed at this startup. And, while
Vikas claims that the invite-only strategy was more from a manufacturing
standpoint, there was no denying the coolness bar was raised a notch higher when
the programme was first launched. Of course, as brand awareness reached peak
levels in 2015 and the launch of OnePlus 3, this invite-only programme has been
permanently discontinued.

But, considering that OnePlus plans on taking on Apple and Samsung at the premium
smartphone game, both of whom still hold strong in 2017 garnering 13.7% and
20.7% globally, it does seem like they have their work cut out for them – in terms
of increasing adoption in India through providing better after-sales service, widening
the ‘OnePlus India Never Settle’ experience to include offline retail and continuing
to understand what their community wants. For two friends who sat down and
decided to make a cheaper iPhone, the world certainly seems to be theirs for the
taking – one smartphone at a time.

Demand, Forecasting & Product Success

 Product Demand
It’s the smartphone that’s managed to dominate the market in a very short amount
of time, an impressive feat accomplished largely due to a clever marketing plan.
OnePlus One has earned the title as the new king of mid-range smartphones, and the
buzz surrounding the product is still growing at an unprecedented rate.

The demand for the invite-only smartphone was so great that traffic to the website
skyrocketed, reaching 25.6M visits in December 2014 – just one year after the
OnePlus website was launched.
  The OnePlus One craze: How the Company did it
One Plus’s aggressive marketing strategy has three main elements, all of which are
innovative in themselves. Combine them together, and you’ve got a triple threat
three-pronged marketing strategy that has thus far been highly successful at fueling
the hype – and demand – for this new smartphone.

The phone is cheap, but without compromising quality. It’s relatively low priced
with a high specification ratio.

It’s invite-only. This has been the driving force in creating the craze behind the
phone, as the manufacturers are appealing to basic human nature: we always want
what we can’t have. The buy by invitation only system allows the manufacturer to
gradually fulfill the demand while customers are kept in a constant state of
anticipation. This also adds to the phone’s appeal as a “VIP product” for only a
“select” group of people.

It’s something of a niche product. In opposition to all of their existing competitors,

the OnePlus One has the reputation of being the phone for tech geeks.

Add these three elements to a very clever ad campaign – complete with its own
trending hashtag, and you’ve got the recipe for a smartphone poised to take over the
market.
Take a look at some of OnePlus’ effective ads. They’re clean, concise, and most
importantly, poke a little fun at the competition.

 Gobbling up Global Market Share

OnePlus’ marketing strategy was so effective that they managed to grab the word’s
attention, as traffic to the product’s website comes from all corners of the globe.

Here’s a look at the top 15 countries directing the most traffic share to the website:
While the United States is undoubtedly the leading market for OnePlus One, you can
see there’s a rapid surge of traffic from India, indicating that this may be a very
promising new geographic market for the product. Other countries saw huge changes
in traffic as well, as OnePlus One’s popularity continues to soar.

 Crushing the Competition

The new smartphone’s reputation as the must-have phone for the tech-savvy lot had
a direct impact on the OnePlus website. Referring tech-oriented sites helped fan the
flames by directing traffic to the product’s homepage, and ultimately the referrers
lent a big helping hand in cementing brand awareness.

The chart below illustrates which publishers helped sustain the buzz about the phone
through referrals.
How was OnePlus faring compared to its competitors? Or perhaps more accurately,
how were OnePlus’s competitors handling the entrance of this uber-popular
newcomer into the market?

To find out, we took a look at how the company was competing with their closest
rivals in terms of traffic to their respective websites. For this comparison we used
Blackberry, HTC, Motorola and Xiaomi.
Based on this graph, it doesn’t look like much of a competition. You can see how
quickly site traffic to OnePlus managed to surpass each of the competitors we
analyzed in just a matter of months, and its traffic continues to rise. It’s also
interesting to note that OnePlus visitors are more engaged, based on visit duration to
the site.

 OnePlus + Social Media = Winning strategy

Now for the traffic breakdown by source: out of all of its main competitors, OnePlus
One is the only smartphone with the greatest amount of traffic from Direct. This
illustrates how strong the brand is – clearly, OnePlus One’s reputation preceded
itself.
Perhaps this is most obvious, though, when you take a look at traffic from social
media. Traffic from social media to the OnePlus website dwarfs the social traffic
driven by their competitors.

While certainly social media doesn’t even come close as a substantial traffic source
when compared with other major traffic sources (especially Direct and Search),
OnePlus One is clearly commanding the social scene. Social media provides the
company with nearly 8 percent of total incoming visits and continues to rise, with
Facebook, Reddit and Twitter being the main social media sites directing traffic.

OnePlus One also has a very good distribution of traffic sources – another aspect
that sets it apart from the competition. Again going back to the appeal of the phone’s
exclusivity: When something is invite-only, everyone wants it… and everyone talks
about it.

 Making a Lasting Impression

One of the distinguishing features of OnePlus One’s marketing campaign was the
invite-only incentive, which prompted some aspiring entrepreneurs to start selling
invites. There was some question as to the phone’s sustainability given the business
model.

Then Black Friday and Cyber Monday happened. During that time, OnePlus
temporarily removed the invite-only requirement for purchase, and allowed people
to simply buy the phone on the website. The results speak volumes about the phone’s
brand presence.
On October 28th, the OnePlus website received nearly 2.5M visits – 226 percent
higher than the previous month’s daily average. This traffic volume accounted for
one day, but was almost the same amount of site traffic the company received for all
of October.

Since then, OnePlus has started allowing users to buy the phone invite-free on
Tuesdays, and thus far the phone is as popular as ever.
Whether the phone’s popularity would continue to soar if the invite were removed
for a longer period of time remains to be seen. But even OnePlus skeptics can agree
that there’s something to be said for the relatively unknown that – thanks to a clever
marketing strategy and the power of social media – has managed to climb to the top
of the ranks of mid-range smartphones’

 Most Successful product of OnePlus

The OnePlus 5 is the most successful OnePlus launch till date as Gadgets 360 caught
up with OnePlus co-founder Carl Pei earlier in July 2017 where he had an in-depth
chat about all things OnePlus 5, and one of the things we asked him is which variant
- 6GB/ 64GB or 8GB/ 128GB - of the smartphone is more popular?

"If you look at the aggregate, globally, more 128 models are sold than the 64," Pei
said. "In India, it's not as much but way more than we thought. In India, 64GB is
more popular, but [the demand for 128GB] is much more than I expected."

"That's I think where I made a mistake, I underestimated the [demand for] the 128-
gig device. Because we were always afraid, especially in India, we're selling that
one at Rs. 38,000 “he explains.”[When] we launched a couple of years ago that was
a very scary price point, and hearing from the rest of the market - from the other
players - it’s also a price point where they're not doing a lot of volumes. So I think
we underestimated the demand for the 128."
At the OnePlus 5 India launch, Syzmon Kopec, Product Manager at OnePlus had
told Gadgets 360 that the company was exploring Samsung Dex- like technology
that converges the mobile and desktop experiences. We asked Pei if the company
had made any progress since then.

"They might be looking into it, but I don't think it's something we're going to launch
very soon," Pei replied. "So our philosophy when it comes to the products is 'It's not
important for us to be first, it's better for us to wait until the experience is mature
enough to actually be useful.’"

"As you recall," he continued, "the dual camera has been around for a very long time,
even before the iPhone. Only after iPhone [7 Plus] came out that the experience
became more and more mature, and other brands started doing more and more of it.
So personally, I think like using your phone as a desktop is still some time away."

Instead, Pei said, OnePlus is focusing on improving the core experience for its users.

"We are looking at some localization like improvements for instance like we released
the Paytm partnership with the [OnePlus] 5," he explained. "But most of our work -
the vast majority - still goes into the core experience and optimizing. So as an
example when you launch an app on the 5, the CPU core[s] they all open and this is
by design, so you launch app much quicker and then it cools down again to become
automatic. So these small things that can really improve the day-to-day experience.
Scrolling - you said it was laggy - but actually, it's one of the smoothest experiences
if you benchmark [against] its peers."

OnePlus 5 units sold in India are being manufactured by Oppo, and we asked Pei to
elaborate on that aspect of the relationship with its parent company.

"We use the Oppo factory [to manufacture in India] and we manage the Oppo
factory," he said. "In China, a lot of our phones are also manufactured by the Oppo
factory. So it's like [if] I [were to go] to Foxconn and [tell] them to manufacture our
products."

"It's a very complex ecosystem, for instance, a lot of the back housing on our phones
are made by Foxconn," Pei said. "So, different things are made by different people
and we assemble it somewhere else."
  OnePlus 5 Breaking Records already: 3x Higher Sales than the
OnePlus 3T
The OnePlus 5 is one of the most popular Android smartphones around the world
right now, even more so in India since it was officially unveiled in the region on
June 2017. The device comes with a pretty attractive hardware specs sheet,
accompanied by a dual camera setup (16MP + 20MP), which complements the other
features pretty well.

The smartphone was officially launched via Amazon India during launch week as
part of an exclusive early access sale, and it seems like the device was in high
demand. As per a tweet posted by OnePlus earlier today, the OnePlus 5 was the
highest grossing smartphone during launch week on Amazon India. The company
failed to disclose numbers, however.

The company also mentioned that the phone sold 3x more units than the OnePlus 3T
in the same period. This doesn’t tell us much, though, since the OnePlus 3T was
merely a refreshed version of the OnePlus 3. It was mostly considered a rehashed
model rather than an all-new handset.
Speaking of the company’s new accomplishments, Vikas Agarwal, General Manager
of OnePlus India said - “Our mission is to make the best smartphone and the
OnePlus 5 is yet another step in this direction. We are truly humbled by the
unprecedented response to our latest flagship”.

The OnePlus 5 is equipped with a 5.5-inch Full HD (1920x1080) Optic AMOLED

display panel, accompanied by 16MP + 20MP dual rear cameras, a 16MP front
camera, and the Octa-core Snapdragon 835 processor. The handset also comes with
6 or 8GB of RAM, coupled with 64 or 128GB of storage respectively. The company
is using a 3,300mAh battery to keep the device going throughout the day, while
Android 7.1.1 Nougat (w/ Oxygen OS) handles the software side of things.

The OnePlus 5 is available via Amazon India and the official OnePlus online store
for Rs 32,999 (64GB + 6GB) and Rs 37,999 (64GB + 8GB) respectively.

 Demand of Oneplus 3T
Chinese smartphone maker OnePlus has been talking about making its flagship
phone in India for some time now. And in 2017, the company made this happen.

“Their goal is to produce at least 70-80% of demand for OnePlus 3T in India”

— Vikas Agarwal, OnePlus India head

Typically, brands have shied away from manufacturing in India because of the lack
of an ecosystem for hardware manufacturing. “It’s easy to start, but hard to maintain
quality,” Aggarwal said. But this is slowly changing. “Now with the government
incentivizing manufacturing, it is creating confidence in the mind of serious brand…
It will probably take 5-10 years but you have to start somewhere,” he added.

Right now, brands assemble phones in India to get tax benefits offered by the
government. Going forward, they need to move into full scale manufacturing and,
then as a final step, make India an export hub if the manufacturing story has to be
called a success.

India’s premium smartphone segment has been growing at a healthy clip and
OnePlus has been able to carve out a niche for itself. As of September 2016, OnePlus
ranked fifth in smartphone shipments to India, after Samsung, Oppo and Lenovo in
the Android ecosystem, according to Cybermedia Research.
OnePlus has become #3 in India's premium smartphone segment.

In the premium segment (phones priced between Rs 20,000- Rs 50,000) OnePlus is

now the third largest seller with a 9.3% market share. Samsung leads in the segment
with 37.3% and Oppo with 26.5%. Both Oppo and OnePlus are owned by BBK
Electronics, a Chinese electronics company.

In 2017, the company will open six more service centers in India, taking the total
number to 12, Aggarwal said.

 Death of Indian Smartphone Brands

There was a time when Indian brands, which sold made-in-China products, ruled the
market. But that’s going to drastically change as Chinese phone makers target the
market directly.

“Fifteen years ago, there were only global brands. Then Indian brands saw the
opportunity,” Agarwal told FactorDaily on the sidelines of the launch of their first
experience store in Bengaluru’s upscale Brigade road. But eventually, he expects
“most Indian brands to eventually exit the market, because they don’t really have
any competitive advantage.”
Brands need to move into full scale manufacturing and make India an export hub if
the manufacturing story has to be called a success

This is already happening. According to IDC International, which tracks

smartphone shipments, China’s Lenovo Group now has a 9.6% market share,
pushing Indian brand Micromax to a number three, while Samsung Electronics
continues to retain the top spot. Indian brand Lava has been displaced from the fourth
position by Xiaomi.

Indian brands such as Micromax and Lava, which banked on distribution strength
for sales, are going to face more aggressive opponents in Chinese brands. “They
have scale and aggressive investments in marketing,” said Agarwal.

Sales Strategy
OnePlus sticks 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, demand
for which it expects 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, 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 launch OnePlus 3T — a ramped up version of its popular OnePlus 3

— was made available in India from December 2016. A large part of the Indian
demand for the device was met locally. OnePlus had tied up with Foxconn for
making the Rs 16,999 priced OnePlus X in India for its previous 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 Rs 27,999 upwards.

The company’s share in the above $400 segment (over Rs 27,000) — has crossed
that of Apple, displacing it from second position as of September 2016 end, data of
Cybermedia Research, on the back of launch of OnePlus3 in June 2016.

OnePlus’ share, has in fact jumped to 18.7 per cent to No 2 in the October-December
2016 quarter, from No 6 in April-June 2016 quarter when its share was only 2.7 per
cent.

OnePlus is behind No 1 Samsung which had a 49.5 per cent share, and is ahead of
Apple which is at No 3 with 14.7 per cent share, Lenovo’s 10 per cent share and
Oppo’s 2.2 per cent 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.

Annual Report
Annual Report Card 2014
Note: OnePlus has not published its annual report card since 2014.
SWOT Analysis
OnePlus is relatively a new company is a smartphone market and has a long way to
go in regards to achieve its long term goals and become something they all are
working for. In 2016, we have their latest flagship-killer, the OnePlus 3 which
stormed the market, however the company has to consistently improve their model
and analyze their situation in the market in order to sustain. Here is a SWOT
analysis of OnePlus explaining their current situation as a company.

Strengths:

 Low cost smartphones with high specifications.

 Rising as one of the fastest growing companies.
 Exclusive partnership with major e-trailer Amazon.
 Sold out 30,000 units of the OnePlus 2 in China within 64 seconds after
launching the product sale.
 Special Android platform Oxygen OS is a big strength since it sets them
apart from other Android users.
Weakness:

 Limited production capacity.

 New entrant.
 Highly competitive industry.
 Online sales may eliminate offline audience.

Opportunities:

 Broaden the geographical market base.

  Resort to mainstream product advertising.

Threats:

 New entrants selling equally competitive phones at lower prices.

 Inability to keep up with the huge capital involvement in the industry trend.

Key Factors Considered in the Report

Instruction to OnePlus.

History of OnePlus.

Products manufactured by OnePlus.

Competitive Set of OnePlus.

Pricing Strategy.

Marketing Strategy.

OnePlus turning its gaze towards India.

Product availability of OnePlus.

Issues Plaguing OnePlus.

OnePlus Switching From Cyanogen to Oxygen OS.

Competing With a Plethora of Smartphone Brands.

Making the Jump to an Omnichannel Retailing Experience.

2017, OnePlus 5 Launch, And Making India the Core Focus.

2017 Is India-Focused.

The OnePlus Core Vision: Breaking Down ‘Never Settle’.

Demand, Forecasting & Product Success.

Sales Strategy.

Annual Report.

SWOT Analysis.

***END***