OnePlus: A Chinese Tech Start-up Aiming to Disrupt the Global Smartphone Market

This case is a Winner of the 2015 Global Contest for the “Best China-focused Cases”, co-organized by the China Europe International Business School (CEIBS), Shanghai MBA Case Development and Sharing Platform and The Global Platform of China Cases.



Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

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EXCERPTS

GAINING MOMENTUM

Following the global success of OnePlus One, in July 27, 2015, the company announced its second flagship product the OnePlus 2 built using OxygenOS, the operating system developed in-house by OnePlus. The OnePlus 2 was launched using a virtual reality Android app as opposed to the traditional press conference or webcast.

It was the world’s first product launch in virtual reality. According to industry observers, the OnePlus 2 adopted state-of-the-art technology with high specifications and a beautiful design. The 64GB version of OnePlus 2 was available for US$389 unlocked and without a contract from network providers while the 16GB OnePlus 2 was available for US$329. The phone was quickly grabbed up by customers who felt that given the top of the line specs, its pricing was reasonable compared to iPhone 6S and Samsung Galaxy S6 that were available in the market for about US$650 and US$685 respectively. Over 2.2 million customers registered on the company’s websites for invites to buy the OnePlus 2 by the end of August 2015...

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BUSINESS MODEL OF ONEPLUS

According to industry observers, the business model of OnePlus was unique as it helped in creating attractive products at low costs. The company focussed on establishing a credible smartphone brand and a solid customer base while matching user experience at a lower price. OnePlus adopted a lean and low-risk business model so that benefits could be passed on to customers in the form of low prices...

GLOBAL FIRST STRATEGY

Unlike other Chinese smartphone makers that focused on the domestic market before going global, OnePlus from the outset began focussing on foreign markets. Though China was the biggest market for smartphone sales, representing 30% of total sales of smartphones in the second quarter of 2015, the slowdown in the country’s economy along with signs of market saturation pushed OnePlus to seek international growth...

MARKETING

Unlike big smartphone manufacturers like Samsung which spent billions of dollars on marketing their devices, OnePlus focused on online marketing and community interaction. The start-up spent very little on marketing and instead relied on word-of-mouth and social media platforms such as Twitter, Facebook, Google Plus and Youtube to spread brand awareness...

INITIAL RESULTS

The company’s first smartphone OnePlus One marketed as the “Flagship Killer” became a hit not only in China but also in the US where demand outstripped supply. Analysts felt that OnePlus was one of the fastest growing Chinese smartphone companies which lured customers globally through cutting-edge devices at prices that challenged the competition. On being called the underdog of the competitive global smartphone market, Pei said..

CHALLENGES

According to analysts, OnePlus faced tough competition in the crowded domestic as well as global smartphone market. Many Chinese smartphone manufacturers such as Xiaomi, Meizu, Huawei and ZTE were offering Android phones with premium features at budgeted prices similar to those of OnePlus and were also expanding to new markets...

THE ROAD AHEAD

On January 18, 2016, OnePlus announced that it would offer free standard shipping on all orders with a minimum value of US$100.The offer also extended to customers ordering from different countries, though currency limits varied depending on the country. ..

EXHIBITS

Exhibit I:Specifications of OnePlus Products

Exhibit II:OnePlus Invite System

Exhibit III:OnePlus vis-à-vis Competitors

Exhibit IV:OnePlus Global shipments (2014)

Exhibit V:Design Your Own Never Settle Posters Contest

Exhibit VI:OnePlus and Competitor Desktop Visits (Feb 2014-Jan 2015)

Exhibit VII:OnePlus Revenues (2014)

Exhibit VIII:Global Top Ten Best Performance Smartphones (Based on units sold)

Exhibit IX:Global Smartphone Shipments