Companies like Xiaomi and OnePlus tend to get a lot of media attention, perhaps more than what they might deserve. But who am I to question that? After all, they sell pretty good devices at affordable prices. Xiaomi, for example, has risen to the top ranks with best-selling phones such as the Redmi 4 and Redmi Note 4. Now, they are gradually expanding to the offline arena, and have become formidable competition for the local smartphone brands and market leader Samsung. OnePlus, on the other hand, is a different story altogether.
Back in 2014, OnePlus debuted in the Indian market with the “flagship killer” moniker for its OnePlus One. The idea was to sell a smartphone with premium specifications and at a price that is almost half of the flagship smartphones of the time. People bought into the gimmick and the OnePlus One was an instant hit. Just like any other company will do, riding high on the momentum, the company expanded its portfolio with the OnePlus 2 and OnePlus X. Launched at Rs 16,999, the company hoped that the OnePlus X would penetrate the lucrative lower-tier of the mid-range segment. Evidently, it wasn’t really as successful with factors such as the poor camera and unreliable OxygenOS playing spoilsport. ALSO READ: OnePlus X Review
OnePlus eventually returned to the one phone a year strategy, something that had worked for it in the past. “The original thinking behind the OnePlus X was that we wanted a smaller form factor, and we wanted a really beautiful device. But in January we were doing research about current products for the OnePlus 3, when we had a fan gathering to talk about products,” Pete Lau, chief executive officer, OnePlus told livemint last year.
“When it came to the OnePlus X, the feedback was that ‘it’s a very beautiful device, and I like the form factor but I wouldn’t buy it. I want to buy a flagship device,” he added.
The point here is that OnePlus, even though relatively new, has its own share of ups and downs. Besides the media hype and social media buzz, the fact is they are here to make money and become a solid brand. A while after pulling the plug on the OnePlus X concept, the company introduced the OnePlus 5 with the same philosophy. As we’ve already said, the company is no longer the flagship killer, but aiming to become the flagship player itself. ALSO READ: OnePlus 5: It’s moved on from being a flagship killer and turned into a flagship itself
But the challenge that OnePlus faces is that in order to become the top-selling player in the Rs 30,000 and above price segment, it will have to take on the best of the best. In a consumer segment that is based on the concept of aspirational value, OnePlus will need to have a phone that its customers can flaunt and treat as a status symbol. Of course, the aggressive price strategy and top-of-the-line specifications are OnePlus’ biggest strengths but does the company have enough meat in its products to take on the likes of the Apple iPhone and Samsung Galaxy S8? Sure, but it won’t be easy.
Just like all the price categories, the premium segment is currently dominated by players such as Samsung and Apple. According to a Counterpoint study, OnePlus along with the likes of OPPO and Google did make it to the top five list of the segment but each had a very small market share as such. “The premium segment (>Rs30,000, US$465) grew a healthy 35 percent YoY. Samsung retained the top position with 48 percent market share, followed closely by Apple at 43 percent market share,” says the study.
You’ll be surprised to know OnePlus’ market share in India in the last two quarters. According to Counterpoint, “OnePlus had 1 percent market share in CY 2016 and in Q1 2017 0.4 percent in Q1 2017.” 0.4 percent, yes, you read that right. So beyond the media hype and rave reviews of the OnePlus 5, the company has a long and difficult journey to establish itself in the country.
Even for Xiaomi, it took quite a few years to rise, and that too by consistently offering budget smartphones with top-end specifications. Xiaomi too is a media darling, but its journey has been a roller coaster ride before it went back to the basics. Currently, it is clearly focused on the budget segment and its phones are selling like hotcakes. OnePlus, on the other hand, has to start practically from the beginning. Will the one-smartphone-per-year strategy work?
Let’s admit it, OnePlus is no Apple, but it could become that kind of brand in the future. Beyond the hype and media attention, OnePlus will have to ensure its product strategy is on par with Apple’s, if not better. It’s phones have to have longevity and support, too. While Apple included phones as old as iPhone 5s for the iOS 11 update, OnePlus could not even provide Android 7.1 Nougat update to the OnePlus 2, which was launched in 2015. Adventures like the OnePlus 3T don’t help the company’s image either, considering that it was only an incremental upgrade over the OnePlus 3. It’s a phone that exists because it can, and not because it must. Now, coming back to the one-year-one-phone strategy, there is little apprehension about OnePlus’ ability to milk the opportunity.
“While the availability of different SKUs across the price spectrum helps a brand to target a diverse set of audience in a country like India but at the same time it demands various resources and channel strategy to stay ahead of the competition. In such a scenario it completely depends on brands how they want to position themselves,” said Counterpoint analyst Parv Sharma.
“Oneplus, in this case, follows niche market strategy focusing only on premium segment. Sticking to a single flagship per year ensures better margin as one can forecast the demand and control the inventory in a better way. Also longer the lifecycle of the device better will be the margins as component costs reduce over the life cycle,” he added.
OnePlus is no stranger to the media attention and hype. The company should mobilize the attention to its advantage and stay disciplined in coming years if it wants to scale up from 0.4 percent. The premium segment, even though small, is growing and perhaps offers a better opportunity for brands to have larger margins, so that they can bring more innovation. As a result of the hype, will we see OnePlus as a strong premium segment player by end of the year? Let’s wait and watch.