September 29, 2023

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OnePlus meant to screw Samsung. Instead, it screwed itself

When it first started life in 2013, OnePlus had a clear strategy in mind. With its “flagship killer” moniker and “Never Settle” slogan, it was clear that the Chinese company was looking to shake-up the smartphone market with affordable devices that delivered top-end specs to rival its big-name competitors, namely market leaders Apple and Samsung.

The company’s first smartphone, the OnePlus One, cost just £229 at a time when flagship devices were fetching upwards of £500 (the iPhone 5S started at £549, while the Samsung Galaxy S5 cost £600 at launch), yet – as WIRED noted in its review – it was a seriously impressive phone, with a high-spec, excellent screen, great camera and flagship-rivalling processor.

This strategy continued with the OnePlus 2 (£249) and the OnePlus X (£199), and it appeared to pay off for the company. By offering flagship-level smartphones at aggressively low prices, OnePlus quickly gained a loyal and vocal following, accelerated further by its community-driven image and “invite-only” system that positioned its devices as VIP products for only a select group of people.

In recent years, however, OnePlus’s strategy has become muddied. With prices of OnePlus devices increasing some 75 per cent since 2016, the company has gone from a “flagship killer” to an unexciting flagship maker; this year’s OnePlus 8 and OnePlus 8 Pro are its most expensive handsets yet, with the latter starting at £799, and climbing to £899 (more than £100 more expensive than Apple’s top-end iPhone XR).

This major shift in strategy began with the OnePlus 5 series in 2017, and it has seemingly paid off for the company in some markets. Neil Shah of Counterpoint Research says the company has been “making strides, particularly in the high-value segment”; it’s usurped Apple and Samsung to become the leading premium phone maker in India, and it ranks in the top five in the UK, US and China for flagship smartphone sales.

However, as evidenced by recent figures shared by Shah, that doesn’t give us the full picture. Although “making strides” in the premium space, OnePlus accounts for just one to two per cent of the overall global market and fails to make a dent on the top ten OEM rankings; in fact, Shah says OnePlus places around 20th on the list, which he claims can be blamed on the fact that it “doesn’t focus on cheaper devices like Xiaomi or Samsung and doesn’t have the global scale of Apple”.

This means, in terms of overall volume, that OnePlus is being bested by its Oppo and Realme siblings (companies that have all stuck to their low-cost philosophies), and it’s even selling fewer smartphones than the likes of Lenovo and Techno (no, us neither). Instead, the company falls into the “Others” category, which saw sales more than halve in Q2 2020; combined, these elusive ‘other’ brands sold 71 million devices in the second quarter of 2019, which has fallen to just 32 million year-on-year.

“Our strategy (like with everything we do) has been to start small, only sell in select markets initially, and then expand from there at a pace that works for us,” a spokesperson for OnePlus says. “So it’s certainly no surprise to us that we’re not in the top ten globally when compared to OEMs selling across all price segments and all over the world.”

However, a former OnePlus employee tells WIRED that things started to go downhill for the company after the release of the OnePlus 5T, which was made exclusive to the O2 network in the UK. Not only did this deal limit the reach of the handset in a market where contract-based purchases make up the bulk of sales, but as OnePlus moved away from its value-driven roots and instead looked to capture Samsung’s target market, customer retention, we’re told, started to drop.

OnePlus – a company that recently released a four-part documentary about itself (a cut of which is coon coming to Amazon Prime) – believed its upstart-esque image and community-driven attitude was the driver of its early success, when it was, in fact, the low cost of its devices. The rabid fanbase that had taken to the OnePlus and its sub-£400 smartphones were no longer being catered to by the company as OnePlus moved to take on its rivals head-to-head.

Sales continued to drop after the release of the OnePlus 6, the former OnePlus employee says, so with the release of the OnePlus 7, the company rejigged its strategy once again with Samsung-esque dual-product releases; it released a ‘regular’ OnePlus 7 model, alongside a more expensive Pro-branded version that edged even further into ‘ultra-premium’. Although the OnePlus 7 series was picked up by numerous operators in the UK, this change in tack didn’t pay off for the company – although it was “saved” by the fact that Apple and Samsung smartphones had started to go over the £1,000 mark.

OnePlus phones are no longer far off the £1,000 mark themselves; the firm’s latest flagship, the OnePlus 8 Pro, is available from £799 in the UK, going up to £899 for the more premium model. Of course, as OnePlus – perhaps tellingly – doesn’t disclose sales figures for its smartphones, it’s impossible to know how well this model has performed; although it sold out in just minutes in India – a country where OnePlus co-founder Carl Pei has celebrity status – research suggests it’s not selling well in the US. The handset failed to get a clean sweep of the UK networks, too, being offered only by Three and John Lewis.

This seemingly lacklustre demand is perhaps evidenced by OnePlus’s latest strategy shift (along with the numerous redundancies it’s making across Europe), which has seen it release the OnePlus Nord – a smartphone that harks back to the company’s early years with its ludicrously cheap £379 price tag, with the company seemingly noticing a gap in the market that it itself created.

“The addition of 5G capability this year increased the overall cost/price for OnePlus flagships and pushed it to an ultra-premium $600+ territory leaving a big gap in the now fast-growing $300-$600 4G smartphone segment,” Shah says.

“It will be a stretch for some of its users to upgrade to the expensive 5G capable OnePlus 8 series when most of them might not even see a 5G rollout in their country for the next couple of years,” he adds. “As a result, it’s an astute strategy by OnePlus to potentially position OnePlus Nord in its core prepaid markets and drive the upgrades for existing and new users in the price segment OnePlus has been doing well since inception.”

However, the Nord’s arrival is badly timed; not only is the smartphone market facing its toughest year yet as a result of the Covid-19 pandemic, but the device also lands at a time when the mid-tier market has never been more competitive, with the likes of Oppo, Xiaomi and Realme and even Apple battling it out to fill the gap that OnePlus created in 2017.

“When the OnePlus 8 Pro nudged the $1,000 price point it felt like the company was out of touch with its core values of delivering a phone with decent specifications at an affordable price,” says Ben Woods, chief of research at CCS Insight.

“The OnePlus Nord takes it back to that heartland, but at a time when the mid-tier market has never been more competitive. Although it ticks all the boxes on specs, the company still faces the challenge of differentiating itself in a market where all devices look the same. Getting ranged across a wide range of channels is going to be a key factor in beating its rivals.”

We’ll likely never know how well the OnePlus Nord actually sells, nor whether it can help OnePlus to boost its lowly share of the market. Sure, it’ll no doubt do well in OnePlus’s key market of India (where it’s almost £170 cheaper than in the UK), but if it’s looking to recapture the Western market, it might be too little, too late.

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