OnePlus: Story behind the Company, Strategy and Directions


I am one of the biggest fans of OnePlus One. Its been over 2 months I have been using the phone now and I have been in total love with it. I was really keen to know more about the company and how could they make a product which is so premium and yet affordable. Last week, we had the first OnePlus fan meetup in India; and I did request Carl Pei, one of the founding members of the company for an interview and he obliged.

We did talk quite a few stuffs about the company, its strategy and the directions ahead. Read on to know more.

Thought of OnePlus and the Culture of the company:

Like most of the startups incubate in a cafe, this bunch of people were sitting in a cafe talking about smartphones and experiences. Though they were working on android, most of them were using an iPhone. When they started discussing on why they didn’t opt for an Android Phone, the reasons were many – Bad build quality, Software not intuitive and a lot of bloatware which comes along. That’s when they saw an opportunity to make a device with a good build quality, attention to detail and a beautiful design which was missing in the market. Price was never a point of focus then. They just wanted to build a great android device which they themselves would use.

They announced the company, and then started to work on their first product and thats OnePlus One. While getting to the prototype, they realized, they can create a flagship killer device at a much affordable price. That started the journey for them.

The culture of the company is dynamic and its changing on a daily basis. The entire company has been growing really quick. In the beginning, they did have some challenges hiring people; as people were reluctant to join a brand new company. So they had to be liberal on who they hire. But now-a-days, since the launch of the device and the traction, they are getting a lot more qualified hires like people who have left high-paid positions to join a startup and build this culture together. They are slowly evolving into a more formalized structure where the roles are more clear-cut so they have people responsible for business, research, product management and support.

Market Research:

For the OnePlus One, it was largely done through the community. Even before the company had announced the phone, they made it public on their forums about the idea to make a best possible phone together. They technically started discussing on the forums, on the kind of screen which people prefer, What battery would they like, etc. They used it as an indicator; and did not just take the user requests and put into a phone because, sometimes user requests do conflict with each other.

Quoting Henry Ford, Carl said, “If you asked the users what they want, they would want a faster horse”. So we used the user requests as inputs and then put the data points into designing this phone. So the primary reason for the phone was the fans, community.

He also spoke about the contest Phone Smash, which they did early this year, where participants, would signup to smash their current flagship phone. If they got chosen, they could smash it on YouTube, and in exchange they could buy a OnePlus One at 1 USD. They saw a lot of people, who were ready to smash their Samsung Galaxy S5, HTC M8 and other phones which were much expensive than OnePlus One. So this contest gave them confidence that, OnePlus One was not just the price, but the product itself is more premium than the competition.

Why Cyanogen:

OnePlus team had a clear focus on making a phone which runs a very intuitive software with no bloatware and a fast OS. The default choice for them was Cyanogen. With Cyanogen, they are staying pretty close to the stock android experience, which was designed for ease of access. Of Course, they officially support 5 other ROMs as well.

Some of the users did face issues with Apps throwing an error message. This happened because, In the beginning the Whatsapp team didn’t know that, this device existed. They just looked at the software, and since the software was CM, they thought it was a custom ROM. But in this case, CM is actually the stock ROM on the OnePlus One. They are fixing this now.

Further, as this device gets more traction, more and more developers would know about it and make appropriate changes to the authenticating mechanism in their applications.

Invite Model and Pre-Order System:

Carl did admit, hardware involves a lot of risk; and one needs to tie a lot of capital to the inventory, and ensure to sell them. Especially, given their business model, where they have no margin. They have no where to absorb these costs, if the supply and demand projection goes wrong.

OnePlus had announced it back in July, that they may consider moving away from the invite system soon. However,  they are still working on the system. They originally hoped to roll out in September, but looks like there is going to be a delay in it, as they didn’t have enough time to make it happen due to the software platform limitations.

They are quite certain, they will face problems when they come in to India later this year. However, they will continue to have the invite method at least to begin with in the market. That way, the fans are 100% sure that, anyone who has an invite can be sure to purchase and receive the product. Later they may try a pre-order model.  This is far better than registering a product online and waiting to hit the Buy Now button which lasts for just few seconds.

In terms of sales, they have already sold 10x times more than what they had initially predicted for this year. Also, OnePlus has a 15 day return policy in the US. When asked about the return rates of the phones, Carl said and I quote,

“The return rate is really really low. It’s somewhere between 0.1 to 0.3 % is what I would say. Its a no question asked Return. To be honest, its pretty hard to get the phone; so once you get it, you don’t want to return it.”

Biggest Concern:

With the buzz the product is getting in the global market, I really thought production rate was their biggest concern. However, when I spoke about the same to Carl, he explained that production speed was not their main bottleneck now. Thier primary focus is to get their operations and customer support teams right. They in fact are not producing at their full capacity at this point. They infact think, If you sell too many phones, and your support staff is not enough, users will have to wait for long time when they have issues with their phone. So they are currently scaling other areas of the company and not just production.

Revenue Generation Model:

According to me, the price seems to be a killer deal. You are getting a premium build and specs at a much affordable price. Infact, if we are doing a tear down on the Phone, I think, we will still come close to what it is priced now. On discussion, I realized, the costs are higher than the established players because their volumes are so low. Generally, Big Players get a much better deal on components due to the volumes. However, they are currently not focused on the price. Like every startup, they are mainly concerned in getting their name out to the people and get them to use OnePlus products. So in that sense, you first create a good product and gain the user base; and when you have users, its going to be easy to figure out the revenue model later.

OnePlus, when compared to other Chinese Companies.

On the global side of the OnePlus the company does not really see themselves as a chinese company. if you look at the team composition, 1/3rd of them are North Americans, 1/3rd are from Europe, and only a third are chinese. So from the very first day, when they announced the brand, they made an effort to talk on their global forums and believed in having no cultural barrier to our fans and users. Also regardless of the region, they always have someone to talk to their fans and that’s why they felt an importance to set up a local team here in India, before even launching the product in the market. Although they have started in China, they are clear enough to build a global company. That’s really impressive.

Carl further said, a lot of people put us in the same basket as a lot of other chinese companies. but I think, as we grow along over the years and execute our strategies, people will see and understand the differentiation.

Workforce in India

In the beginning its going to be about Customer Support, Operations, and Handling fans. Those are the three primary things, they spoke about. By handling fans, they mean, communicating with them on the social media, meeting them in real life, hosting fan gatherings etc.

At some point of time, we can expect some more detailed technical work to be done in India. At least in early stages, we can see some scope on device repairs; which are technical in nature. They are looking at different locations for the first OnePlus office in India, and are still listing on the Pros and Cons. A part of which will also depend on who they actually hire as the General Manager and which partner they decide to work with for product support. The support team is going to include both, someone in-house and also vendors to help us with Support in different regions. At least the majority of the users will have a service center closer to them, when fans need help.

Bamboo Covers:

The bamboo covers have been on the OnePlus store for a while now listed as Coming Soon. It’s just beautifully crafted wood.

oneplus

 

When asked about the availability of these covers, Carl said, the OnePlus One covers fit very snugly and its very hard to remove it. The sandstone black and bamboo covers were made in different factories. Although they were made with the same 3D model, the exact fitting ended to be slightly different. When you replace the back-panel with the bamboo cover and press really hard, one could hear some squeaky noise. That wasn’t impressive and hence, they did not want to deliver a faulty product to their fans. They are now re-designing the bamboo covers so that, it does not have this noise. They did feel bad about delaying this much, but at the same time, they didn’t wanted to ship a squeaky product in the market.

This was indeed a smart move, considering that, there are companies looking around every single step of OnePlus. The moment, you fail in one it would get magnified.

OnePlus Two:

Edit: Aug 2015 – The company announced the OnePlus 2. Read the review here.

They are pretty much planning one flagship killer phone a year. The company still doesn’t have any pre-defined model or specification details for the OnePlus Two. Like mentioned earlier, they are going to start talking to people on their forums for the next device, OnePlus Two and get user requests and feedback. So everyone who is interested can join the discussion and share their requests. In the end, they want to make the best choice for the consumer. I would like a IR booster, some options for MHL, and a replaceable battery. The display can be even more richer as well.

Well, honestly, I love the way how this company give attention to details w.r.t hardware and design. It has been top-notch when compared to other big players. I really wish, Google talks to them to have OnePlus make their next range of Nexus phones. That would be a great deal if it happens.

Roadmaps for Tablets and other Wearables:

The company is not keen in getting into the tablet business at this point of time. They feel that, the nexus 7 is a pretty solid device and is priced really well. and so is iPad. They do not see a fit in this segment as its very competitive and there isn’t lot of margins in this. So , their primary focus is on doing Smartphones as of now. However, they do believe, the smartphones are only a starting point, if OnePlus One and Two can be really successful, they will evaluate other form factors starting next year.

and…

It was already 22:30 IST by then and It wasn’t good on my part to take more of his time. He had an early morning flight back as well. I just ended the conversation on a personal note, asking which three people in the industry does he look up to. The first obvious name he took was Steve Jobs. Obviously, I think, he has made a really big impact in the entire consumer electronics industry. Creating a good product needs a great product person and Apple has fantastic product managers, and this entire product focuses DNA comes down from their founder Steve Jobs. A lot of us should really thank him for starting the smartphone revolution. Two other people whom he named was Jeff Bezos from Amazon for his long term thinking & customer centric focus; and Elon Musk for his big bets which always benefit the human race.

He said, some day, maybe OnePlus can also have higher ambitions in making a smartphone which are top-notch. I think, they are already heading in the right direction. I really look forward to see them grow and create much bigger impact in the smartphone industry. As we all know, this is just the beginning and I wish them all the very best.

…and yes, Welcome to India, OnePlus.