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How OnePlus cornered India’s premium smartphone market | KrASIA Spotlight

Written by Moulishree Srivastava, Simone Martin Published on     9 mins read

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The clear proposition of a premium experience at an affordable price has elevated OnePlus as one of the most popular brands in India.

This article is part of KrASIA’s “Spotlight” series, where our writers from different editorial tables work together to give you a closer look at the tech scene in Asia. Read more about BBK’s beginning and its offshoots here, and learn more about BBK’s impact in Southeast Asia here.

September 4, 2014. Matteo Cafe, Church Street, Bengaluru. That’s where the OnePlus story began in India, with an official fan meeting, according to Carl Pei, co-founder of OnePlus. It was barely five months after the Chinese smartphone maker launched its first device, the OnePlus One, in 18 countries around the world.

“We had quite a crowd showing up and to our surprise, most of them already had the device. The support and enthusiasm that we experienced that night became pivotal to our decision to launch in India,” Pei remembered five years later during the OnePlus 7 series launch event in Bangalore.

“When we first launched the OnePlus One globally, we didn’t plan to launch in India. But we had tons of interest here, so we decided to come down and see for ourselves what it was all about,” Pei said to a cheering crowd of over 3,500 fans.

Despite skipping India for the premiere of the OnePlus One, the company started to promote the phone just three months later thanks to an exclusive partnership with Amazon. Six years down the line, its bet on India has paid off, as the South Asian nation is OnePlus’ biggest market, accounting for one-third of its global revenues.

From a mere 2% share in 2016, OnePlus has risen to control 27% of India’s premium smartphone market. Today, OnePlus is only second to Apple in the premium brand category, according to research firm Counterpoint.

The OnePlus playbook

OnePlus was founded by former Oppo employees Pete Lau and Carl Pei in December 2013 under the wings of Oppo, a brand created by Dongguan-headquartered BBK Electronics, which is also linked to smartphone brands Vivo, Realme, and Iqoo.

Although OnePlus and Oppo have been vague about their common lineage, and Lau has repeatedly denied that OnePlus is a subsidiary of Oppo, KrASIA found that OnePlus is controlled by Guangdong OPlus (Oujia in Mandarin) Communication Technology, a wholly owned subsidiary of Guangdong OPlus Holdings, which also owns and controls Oppo and Realme. 

OnePlus, however, markets itself as an “independent brand” for young, tech-savvy consumers around the world. Since its inception, the firm had the clear proposition of offering products that pack a punch for affordable prices. As a fledgling firm, OnePlus rolled out a clever market strategy.

The OnePlus One, colloquially known as the OPO, was introduced globally in April 2014 under an invite-only system that created a lot of hype for the brand. Priced at about USD 300, and with the latest tech available at the time—including a 5.5-inch full HD touch display, and a Qualcomm Snapdragon 801 chipset powering a CyanogenMod OS version of Android—the OPO was proclaimed as a “flagship killer,” selling at half the cost of the iPhone 6 or the Samsung Galaxy Note 4, the leading premium devices in 2014.

This was a sea change. At that time, India’s top smartphone segment was dominated by Samsung and Apple. Affordable devices were offered by Indian handset players like Micromax and Lava.

OnePlus identified a gap that existed in the market and carved out a niche for itself—affordable premium status, or “mid-premium” devices, according to industry experts who spoke to KrASIA.

“OnePlus brought high-value specifications to devices at affordable prices, targeting the younger generation who wanted to buy Apple or Samsung, but couldn’t afford it,” said Neil Shah, vice president of research at Counterpoint Research. “Samsung would have sold a device with similar specifications and features at 2.5 times the price.”

When OnePlus entered India, a generation of young, tech-literate digital natives were unsatisfied with the options they had for Android phones. Many were willing to take a chance on a new brand, said Navkendar Singh, research director at IDC India and South Asia.

Exclusive online sales channels were not common at the time, but OnePlus’ choice to do just that disrupted the market, thanks to its invite-only system, Singh told KrASIA. “There were two things that the invite-only system did for OnePlus. One was the community-building, and the other was bringing slightly snobbish value to its users. They portrayed themselves as a brand that was giving them good design language, good pricing, and higher specifications, but not everyone could buy it.”

Read more: Meet BBK, the world’s largest phone maker that you’ve never heard of | KrASIA Spotlight

The OnePlus One was marketed as a “flagship killer.” Photo from Wikimedia Commons.

OnePlus also took a leaf out of Apple’s playbook in its decision to launch only one device annually (with some exceptions) in its beginning, said Shah. From mid-2016 onward, however, OnePlus decided to add a mid-year release for an upgraded version of its flagship, when it introduced the OnePlus 3T a few months after the OnePlus 3. The company’s launch cycles were “timed perfectly,” Shah explained, in April-May and September-October, right after Samsung’s flagship premium devices debut. This undercut Samsung’s sales.

However, OnePlus has seen its share of turbulence. Just two weeks after its India launch, sales were halted in the country after homegrown smartphone giant Micromax filed a complaint against OnePlus for infringing upon its exclusive right to use the CyanogenMod. While OnePlus had entered into a collaboration with US software developer Cyanogen to use the mobile OS globally in February 2014, Micromax signed an exclusive partnership seven months later to distribute Cyanogen in South Asia.

The sales ban was lifted after just a week, but the two smartphone players only resolved the legal dispute in May 2015. By then, OnePlus had already launched its own mobile operating system, OxygenOS.

OnePlus encountered further challenges when its OnePlusX turned out to be a flop. The OnePlusX was a mid-range device introduced just three months after the launch of the OnePlus Two in July 2015. “While its specifications were alright, the user experience wasn’t as good. And users did not want to buy the toned-down version of OnePlus when they could afford the flagship device,” Shah said.

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Retain and gain

In 2016, OnePlus upped its game when it recruited Bollywood superstar Amitabh Bachchan for the marketing campaign of its OnePlus 3T. At the same time, it did away with the invite-only system to reach more customers.

Starting at USD 439, the phone was a market success, but other brands took note and targeted the segment of USD 400–600 phones in India. In 2017 and 2018, Samsung released new devices under the Galaxy A Series, while Apple launched the iPhone SE, and Xiaomi introduced its sub-brand Poco. While these competitors all siphoned away some of OnePlus’ market share, its “sibling” companies, Oppo and Vivo, mostly stayed out of the same segment to keep the field open for OnePlus, Shah said.

To counter the onslaught by its rivals, OnePlus made its phones available at brick-and-mortar retailers for the first time in India in 2018, tapping markets beyond major cities. This spurred OnePlus’ next phase of growth, even though its physical presence was still nowhere near the all-encompassing scale of Samsung. 

Aside from opening an array of self-run “experience stores,” OnePlus partnered with several large retail chains such as Chroma, Reliance Digital, and Sangeetha Mobile, as well as general trade stores to sell its devices to a broader consumer base. OnePlus phones are currently carried in over 8,000 shops in India.

Through thick and thin, OnePlus has been able to retain a solid market position because of a well-defined value proposition and the mindshare it had gained, Shah said. The community it created, involving around 5 million users in India, is a loyal following. While OnePlus has continued to differentiate itself by improving its premium hardware specifications, design, and software experience, it has notched up its price point with each release.

In May 2019, OnePlus added a third line of devices with the launch of the OnePlus 7 Pro, launched together with the regular OnePlus 7 (both devices then getting an upgraded T version). Prices for the Pro series hovered between USD 669 and USD 749, while the OnePlus 7 retailed for USD 640, a steep increase from USD 300 for the OnePlus One.

For many, the “flagship killer” had little by little brought its cost close to that of other premium flagships, putting off some price-sensitive users, especially during a time of uncertainty caused by COVID-19.

However, as OnePlus edged closer to becoming a premium producer, it never forgot its roots. In July 2020, a couple months after the release of the OnePlus 8 and the 8 Pro, the firm launched a new line of affordable premium devices called Nord. Priced between USD 345 and USD 415, the OnePlus Nord featured a well-respected Qualcomm Snapdragon 765G chipset with 5G support and 12GB of RAM, as well as a 90Hz AMOLED display, which is usually reserved for flagship devices.

Unlike the washout with the OnePlusX, the Nord series has taken OnePlus’ India shipments to 3 million units in a year for the first time, according to Counterpoint.

“That was a conscious choice made by OnePlus to chase volume and growth,” said Singh, who believes this to be a turning point for the company. Having multiple devices in a year means that OnePlus is widening its price range, which could help the company to dominate the INR 25,000–50,000 (USD 345–750) smartphone segment.

However, Shah cautioned that OnePlus’ growth is likely to be limited within this band. “OnePlus will not go beyond the current price points and enter the ultra-premium segment [above USD 750], as Oppo is working on its strategy to target that market. Oppo would bet more marketing money towards its expansion in premium markets such as China, Japan, and Europe, compared to OnePlus.”

In January, Oppo and OnePlus officially integrated their research and development departments, just four months after OnePlus co-founder Lau took on the additional role of senior vice president at OPlus. “All the innovation will come from Oppo and trickle down to OnePlus,” Shah said. “OnePlus’ growth will depend on whether it can penetrate its markets further in its current price segment, by tapping more sales channels.”

Read more: Here’s how BBK’s offshots conquered Southeast Asia | KrASIA Spotlight

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Expansion to TVs and wearables

Prior to the COVID-19 pandemic, OnePlus had been strengthening its offline footprint in India with the goal of generating almost one-third of its revenue from brick-and-mortar stores in 2020.

However, the pandemic disrupted the firm’s goals, and OnePlus only re-started its brick-and-mortar expansion in October 2020 cautiously. The firm targets to have 44 exclusive stores by April 2021, a considerable reduction on its original plans to open 100 exclusive stores in India’s top 50 cities by 2020, according to local media reports.

Last October, OnePlus made a USD 13.7 million investment to follow its store network expansion and to venture deeper into tier-2 cities and beyond, Vikas Agarwal, general manager of OnePlus India, told KrASIA.

To scale up the business, OnePlus has been also laying the foundation for an ecosystem comprising hardware and software. Over the last 18 months, it has started to produce other products including smart TVs, earphones, and wearables.

“Our aim is to build a premium accessible connected ecosystem by diversifying into new product categories and price points,” said Agarwal. He added that OnePlus is trying to interconnect four aspects of users’ lives: home, office, car, and “self.”

India is becoming a key launch market for OnePlus in areas beyond smartphones. Its smart TV line was released exclusively in India, and there are plans to take it to China, Europe, and the US in the future. The firm has also launched other devices first in India, such as the OnePlus Buds Z, which were later introduced to other markets. The OnePlus Band, the company’s first foray into the popular wearables segment, also made its global debut in India on January 11, 2021.

“In 2020, we took a step ahead by launching the OnePlus TV U and Y series, gaining a tremendous response from consumers in India,” Agarwal said. “With the rapid growth in smartphones fueling content consumption, health and fitness tracking, among other features, we observed that the earphones category, particularly true wireless stereo (TWS) devices, was emerging as a big constituent in the accessories segment,” Agarwal said.

“We believe that, as a brand, we are just scratching the surface of the huge untapped opportunity that India as a market holds,” he added.

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