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China-Focused Cases pp 41–64Cite as

OnePlus: A Chinese Tech Startup Aiming to Disrupt the Global Smartphone Market

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Abstract

This case is about the meteoric rise of OnePlus, a Shenzhen-based technology startup that gained global attention for its high-end, low-budget smartphones sold directly to consumers online through an innovative invite system. Founded in 2013 by former OPPO executives Pete Lau and Carl Pei, OnePlus was one of the fastest growing Chinese startups. It made a global impact in a short time with its sleek devices, low prices, and invite-only exclusivity. The company positioned itself between low-cost smartphone companies like Xiaomi and high-end producers like Apple and Samsung and significantly undercut them on price, despite closely matching them on features. Right from the outset OnePlus promoted itself as a global company with a global mindset. The case highlights the business model of OnePlus, which was built around razor-thin margins and giving value back to its users in the form of low prices. The company sold its phones at cost through an invite-only system, which allowed it to gauge and fulfil demand accurately and avoid the risk of keeping unsold inventory. OnePlus primarily focused on viral marketing and community interaction such as word-of-mouth advocacy and social media to spread brand awareness. Considered a low-cost rival to Apple, OnePlus’s core strengths were an obsessive focus on product design and quality, branding, and customer engagement. However, OnePlus also drew criticism for selling its phones through an invite-only model, as this limited those who could buy the phone and left some customers disappointed. The company also struggled to meet the growing demand for its products as it maintained little inventory to control costs. The case discusses the challenges faced by OnePlus in the crowded global smartphone market and how survival was of utmost importance for the company amid tough competition and slowing economic growth in China. The challenge before Pete Lau and Carl Pei was how to sustain lower prices, make profits, and achieve global success going forward.

Keywords

  • Scalable startup
  • Globalization
  • Competitive strategy
  • Business model
  • Smartphone market
  • OnePlus

The case was developed by Syeda Maseeha Qumer and Debapratim Purkayastha of ICFAI Business School, Hyderabad. The case was developed to provide the basis of classroom discussion rather than to illustrate effective or ineffective handling of a management situation.

This case was the Best Case Award winner of 2015 Global Contest for the Best China-Focused Cases.

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Notes

  1. 1.

    Xiaomi Inc. was a leading Chinese electronics company that designed and developed smartphones, mobile apps, and related consumer electronics.

  2. 2.

    Enderle Group, Inc. provided consulting and advisory services to companies that manufactured technology products.

  3. 3.

    OPPO was a Chinese global electronics and technology service provider that sold mobile electronic devices in over 20 countries globally.

  4. 4.

    Peter Lau previously worked as Vice-President of OPPO and was in charge of the company’s Blu-ray Division..

  5. 5.

    Before starting OnePlus, Carl Pei worked for Chinese electronics manufacturing firms Meizu and OPPO. At OPPO, he worked as Director of New Markets for nine months.

  6. 6.

    Apple Inc. was a leading U.S.-based technology company that designed, developed, and sold consumer electronics, computer software, and online services. Its products included the iPhone, the iPad, the iPod, the Mac, and the Apple Watch. In fiscal year 2015, Apple’s worldwide revenues totaled US$233 billion.

  7. 7.

    Samsung was a South Korean multinational electronics company engaged in the consumer electronics, information technology and mobile communications, and device solutions businesses worldwide. As of March 2015, it was the leading smartphone maker in the world.

  8. 8.

    Qualcomm Inc. was a U.S.-based semiconductor company that designed and marketed wireless telecommunications products and services.

  9. 9.

    Cyanogen Inc. developed Cyanogen OS, an open-source mobile operating system built on Android. In January 2014, OnePlus entered into a partnership with Cyanogen Inc. to provide Android ROM on the OnePlus One. However, the partnership came to an end in April 2015 after Cyanogen signed a deal with Indian smartphone maker Micromax that prevented OnePlus from shipping its phones to India with Cyanogen OS installed.

  10. 10.

    Android Headlines offered news related to Google’s Android platform, phones, tablets, and mobile technology information.

  11. 11.

    Foxconn Electronics Inc was the largest contract electronics manufacturer in the world.

  12. 12.

    In May 2015 China’s State Council unveiled a ten-year national plan, “Made in China 2025,” designed to transform China into a global manufacturing power.

  13. 13.

    Motorola Mobility LLC was a U.S.-based technology company that manufactured Android smartphones, smartwatches, and cell phone accessories.

  14. 14.

    Lazada Group was an e-commerce company headquartered in Singapore.

  15. 15.

    Headquartered in Shenzhen, Guangdong, Huawei was one of the biggest global information and communications technology (ICT) companies.

  16. 16.

    A scavenger hunt was a game typically played in an extensive outdoor area, in which participants had to collect a number of miscellaneous objects.

  17. 17.

    Reddit was a social networking and news website where registered members could submit content, such as text posts or direct links. A person or an organization could host an Ask Me Anything (AMA) chat on Reddit and then field questions from the Reddit community.

  18. 18.

    Strategy Analytics Inc. was a U.S.-based research and consulting services firm.

  19. 19.

    Near-field communication was a form of contactless communication between devices like smartphones or tablets. NFC used magnetic field induction to enable communication between devices when they touched together or were brought within a few centimeters of each other.

  20. 20.

    http://www.Souq.com was a leading online retail website based in Dubai.

  21. 21.

    Euromonitor International Ltd. was a London-based market intelligence firm.

References

  1. Rob Enderle, “One Plus Two Equals Trouble for the iPhone,” Technewsworld, August 17, 2015, www.technewsworld.com.

  2. Shai Oster, “China’s Hippest Smartphone Maker Warns Shakeout Will Get Worse,” Bloomberg, December 9, 2015, www.bloomberg.com.

  3. “China Smartphone Penetration Rate to Reach 38.6% in 2015,” China Internet Watch, October 12, 2015, www.chinainternetwatch.com.

  4. Ewan Spence, “OnePlus 2 At Risk As Co-Founder Confirms Third OnePlus Smartphone,” Forbes, August 6, 2015, www.forbes.com.

  5. Gillian Wong, “OnePlus, a Chinese Smartphone Maker, Opens Up About Its Missteps and Global Push,” The Wall Street Journal, December 11, 2014, http://www.blogs.wsj.com.

  6. “How Will OnePlus Make Money?” May 15, 2014, https://www.forums.oneplus.net.

  7. Jason Cipriani, “The Fortune Interview: OnePlus Co-founder Carl Pei,” Fortune, October 21, 2015, http://www.fortune.com.

  8. John Anon, “Android Headliner: Why Can’t OnePlus Just Get Things Right?” Android Headlines, November 9, 2015, www.androidheadlines.com.

  9. David Rowan, “OnePlus CEO: How to Take an Invite-Only Chinese Brand Global,” Wired, August 4, 2015, www.wired.co.uk.

  10. David Gilbert, “OnePlus One: How a Six-Month-Old Chinese Company Created the Most Talked About Smartphone of 2014,” International Business Times, July 17, 2014, www.ibtimes.co.uk.

  11. Kyle Wiggers, “OnePlus Turns Two Today, and It’s Not Done Breaking the Rules Just Yet,” Digital Trends, December 17, 2015, www.digitaltrends.com.

  12. Saritha Rai, “India Has Exceeded Our Expectations: OnePlus Founder & CEO, Pete Lau,” Forbes, December 9, 2015, www.forbes.com.

  13. Mike Brown, “OnePlus Co-Founder Carl Pei On Competing with Apple Inc., His Company’s Success, and How They Broke America,” International Business Times, August 1, 2015, www.ibtimes.com.

  14. Rhiannon Williams, “World’s Biggest Smartphone Market Hits Saturation as Sales in China Fall for First Time,” The Telegraph, August 20, 2015, www.telegraph.co.uk.

  15. “After Making It Big Globally, OnePlus Turns Its Gaze to China,” Forbes, June 24, 2015, www.forbes.com.

  16. Venkatesha Babu, “If You Make a Great Product, People Will Come: OnePlus Founder Pete Lau,” Business Today, December 17, 2015, www.businesstoday.in.

  17. Dan Seifert, “Can the OnePlus 2 Equal Mainstream Success?” The Verge, August 3, 2015, www.theverge.com.

  18. “China’s Most Successful Startup?” May 14, 2015, www.chinafirstcapital.com.

  19. David Gilbert, “How China Became A Smartphone Powerhouse: Huawei, Xiaomi, ZTE Set To Challenge Apple Inc., Samsung,” International Business Times, November 24, 2015, www.ibtimes.com.

  20. Arjun Kharpal, “Meet the $299 Smartphone You Can Only Get by Invite,” CNBC, October 23, 2014, www.cnbc.com.

  21. Major Tian, “One Plus and Its Global-First Strategy,” CKGSB Knowledge, June 23, 2015, http://www.knowledge.ckgsb.edu.cn.

  22. Florence Ion, “One-on-one with OnePlus’s Carl Pei: ‘We Got Arrogant,’” greenbot, July 29, 2015, www.greenbot.com.

  23. Tony Danova, “The Smartphone Market Surpassed a Billion Shipments Last Year — Here Are the Vendors and Platforms That Are Winning Out,” Business Insider, March 9, 2015, www.businessinsider.in.

  24. David Gilbert, “Why OnePlus X Invites Are Hard To Get: ‘We’re Self-Inflicting A Slower Rate Of Growth,’ Says Co-Founder,” International Business Times, November 5, 2015, www.ibtimes.com.

  25. Karissa Chua, “OnePlus Transitions Away from Hunger Marketing,” Euromonitor International, December 13, 2015, http://www.blog.euromonitor.com.

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  1. ICFAI Business School, Hyderabad, Hyderabad, India

    Syeda Maseeha Qumer & Debapratim Purkayastha

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  1. Syeda Maseeha Qumer
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  2. Debapratim Purkayastha
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Correspondence to Syeda Maseeha Qumer .

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    Qumer, S.M., Purkayastha, D. (2019). OnePlus: A Chinese Tech Startup Aiming to Disrupt the Global Smartphone Market. In: China-Focused Cases. Springer, Singapore. https://doi.org/10.1007/978-981-13-2706-3_3

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