OnePlus founders Pete Lau, Carl Pei say focus of sales to remain online
Pete Lau and Carl Pei on near-term ambitions, the controversy over Flipkart selling OnePlus devices and how they will continue to build one flagship model every year
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Bengaluru: On Friday, OnePlus launched its first experience store in Bengaluru—the Chinese smartphone maker’s first such outlet outside China, underscoring the importance of India as a market for the company.
The Shenzhen-based company has expanded rapidly across the world since its launch in December 2013 and currently operates in over 30 countries.
OnePlus founders Pete Lau and Carl Pei claim that the company has a 19% market share in the premium smartphone space in India, and predict that it will continue to increase, given its current growth trajectory.
In an interview, Lau and Pei spoke about the company’s near-term ambitions in India, the controversy over Flipkart selling OnePlus devices and how they will continue to build one flagship model every year. Edited excerpts:
What are your long-term ambitions in India?
Lau: In terms of the experience store, it’s lots of different things—first of all, our team is here. And then, a lot of our users will also be here. For example, we will have a rooftop garden here (in Bengaluru) where we will serve snacks and coffee. So our users and fans are always welcome to be here because a lot of our success hangs on how well we understand our users—so having them really close to us means whenever we have a question, we can go downstairs or upstairs to get this type of understanding. So, it’s not about sales—it’s about the trust that we create.
Pei: In terms of the India market, we have around 19% of the premium market which is the above $400 segment—that’s where we are going to be focused on. We want to really focus on a high level of service for our users—that’s one of the goals of the experience store here. Over time that’s our strategy—maybe that sounds too simple, but we believe that if you create the best products and create a high level of service, it’s hard not to be successful in the long run.
So far, you’ve only used the online channel for your sales strategy. Are you also considering an offline play, like some of your other rivals such as Xiaomi? Are you also planning more experience stores in India?
Pei: We’ll see how this one goes. If this one goes really well, we might open in other cities—just like with our exclusive service centres. We started with just a handful, now we are rolling out more and more across the country.
In terms of channels, we are committed to staying online only for now. Our business model in India will be online sales and offline experience. We don’t see much competition in our India market. We always see ourselves as our biggest competitors. Our own mistakes hurt us much more than what other people do.
Are you planning to tie up with carriers in India as well?
Pei: India is a big market and e-commerce is really big in India. I think around 30% of all smartphones are sold online—that’s big enough. We don’t need to expand our channels.
What’s your road map on new product launches? Will you have a new launch in 2017?
Lau: Yes. We sell one flagship (phone) a year. Whenever we finish designing and manufacturing is when we start selling.
In December, there was the controversy over OnePlus devices selling on Flipkart despite your exclusive partnership with Amazon India. What steps are you taking to tackle the issue of your devices selling on other platforms?
Pei: I think it’s not something that any brand can avoid. Yesterday Flipkart was going to sell Apple (phones) for Rs9,999—but it doesn’t really matter to us. It’s not a healthy business model to sell at a loss. It’s not going to continue because it’s not profitable. It might just be a one-time stance, so we are not paying too much attention to it.
Have you spoken to Flipkart?
Pei: Our sales teams have spoken to Flipkart. Right now we are happily married to Amazon.
Like other foreign firms operating in India, will you consider manufacturing in India as part of the government’s Make in India initiative?
Pei: We started experimenting with Make in India with our OnePlus X model back in 2015 and for the OnePlus 3T we are experimenting as well. We are not in too much of a rush. Our No. 1 concern is still quality, no matter where it is manufactured. We are looking at different options.
What are your broader international plans?
Pei: Very similar (to India). We believe a good product resonates not just in India or China, but globally. Europe is also a big focus area for us. One of our biggest pain points was that users could not touch and feel products before buying them. In Europe, we have solved this problem by working with carriers, so now our devices are available with our carrier partners. So users can also touch and feel the products before buying. We are in 33 countries. But we need to build deeper in Europe and India.
Will you look to raise more funds this year?
Carl: We are profitable. We don’t need to raise more money. If you look at our product strategy, if we wanted to grow really fast, we wouldn’t make flagship premium phones. We’d make a cheap phone that sells a lot. Then you can raise money and sell even more. But we take a very patient approach. So, it puts us in a better position from a funding perspective—we don’t need to rush there. If you’re profitable, why would you need to raise more money? Also, that’s why we stick to online. By selling only online, we don’t have the same offline market structures.
What’s the composition of the team here in Bengaluru?
Pei: We will have software-side testers here, tech people, we will have sales and marketing, we will have product people here. Then we want to start our campus recruitment programme, so we get young talent into the company early on and groom them internally.
What are some of the biggest user pain points that you will attempt to solve with your future models?
Pei: When you look at the pain points, if you look at a number of studies, battery (life) is the No. 1 pain point for smartphone users. And not just with a bigger battery, but also Dash Charge, which I would argue is one of the best charging implementations. When people get Dash Charge, they change their habits. They don’t charge their phones overnight anymore— whenever you need to go out, you charge for 10-15 minutes and you’re set. It changes habits. And when you change habits, it’s hard to go back.
The global smartphone industry has a very high mortality rate—Nokia and BlackBerry being the most notable casualties in recent times. And even in China you’re up against Xiaomi, Oppo and Gionee to name a few. How do you differentiate and guard against disruption?
Pei: 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.
Lau: Focus is the best way. 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. The camera has to be the best, the battery has to be the best, the smoothness and the system has to be the best—if these three are the pain points, then our products have to be the best in these areas.
Can you share your latest revenue and unit figures?
Lau: We don’t talk about our numbers because it distracts from what we are trying to build. But we have some data— for instance, in the $400-plus space, we are already No. 2. Last year, we were also profitable. We are quite proud of that, because for a three-year-old company in a very competitive space such as smartphones, there are not too many profitable start-ups.
We understand that sales of your latest model have been sluggish compared with earlier models. How are you planning to get the numbers back up?
Pei: Our biggest challenge is that we can’t manufacture enough. We haven’t seen a decrease in numbers. We tend to be slightly more conservative when it comes to projections. Over the past three years, starting with the OnePlus One, it’s always been slightly difficult to get our devices. Internally we’ve always been increasing our projections. In Europe, it takes four weeks until we can deliver to you.