Yes, this is about OnePlus and how the company seems to be turning over a new leaf. But first a little history.
Unless you are a tech news freak, the chances are that you will not know about BBK Electronics. BBK Electronics is a company based in China that started out by manufacturing DVD players and other electronic items but slowly started converting itself into a smartphone manufacturer. Unlike other smartphone companies which focus on a single brand, BBK has three smartphone companies operating under its umbrella.
In the beginning were…Oppo and Vivo
BBK started with two smartphone brands: Oppo and Vivo. Vivo entered the smartphone market in 2009, followed by Oppo two years later. Despite sharing the same parent, Oppo and Vivo are run like independent companies. They have their own smartphone models and truly compete against each other. The companies have their own independent advertising campaigns and also have their own independent distribution networks.
But even though Oppo and Vivo may operate like independent companies, they have a lot of similarities. Both of them concentrate on the premium and mid-range segment of the smartphone market rather than the low-end. The products of both the companies are heavily inspired by the iPhone. In fact, Vivo’s Fun Touch OS is almost a direct replica of iOS, while Oppo’s Color OS isn’t too far off either. Both the companies prefer emphasizing on features of the smartphone that matter to the average consumer rather than running behind specs. Both spend heavily on advertising and are known to provide some of the most generous commissions to retailers.
Both companies serve a particular segment of the smartphone market and are great at what they do. Not everyone wants a smartphone with the latest processor, and the average person simply does not care about software updates.
Along came OnePlus
In December 2013, a company called OnePlus entered the smartphone segment. OnePlus started off by promising the latest hardware and clutter-free Android at a very competitive price. OnePlus One, the company’s first smartphone, delivered on this promise and was an instant hit.
While it was known that OnePlus’ CEO, Pete Lau, was a former Oppo employee, not many knew that BBK Electronics was the parent company of OnePlus as well. OnePlus constantly kept positioning itself as an independent company. However, as time passed by, it became clear that OnePlus was nothing but a wholly owned subsidiary of Oppo which in turn was owned by BBK. Today, it is generally accepted that Oppo, Vivo, and OnePlus belong to the same parent company.
Now, as long as OnePlus was delivering upon its promise of “latest hardware + latest software + affordable price”, people did not really care about who owned the company. And the company continued to deliver on its promise with the OnePlus One, OnePlus 2 and OnePlus 3/3T. Both the OnePlus One and OnePlus 3 have been widely regarded as among the best smartphones in their respective price bands. The OnePlus 2 also carried immense potential but did not quite rise to the expectations thanks to some software issues and also the less than impressive Qualcomm Snapdragon 810 chip.
A new phone…and a new OnePlus?
This year, OnePlus launched the OnePlus 5, skipping the OnePlus 4. While the company’s core strategy of latest hardware + latest software + affordable price remains largely unaltered, the OnePlus of 2017 is now vastly different from the OnePlus of yesteryear (a fact highlighted by a colleague a few days ago).
When OnePlus started out, the company decided to pursue guerilla marketing tactics, relying on its fans to spread the word and get sales going. These tactics helped OnePlus save upon marketing costs that it could invest elsewhere. However, in 2017, OnePlus became extremely aggressive with marketing.
I am no marketing guru, but I do know for a fact that signing up someone of the stature of Bollywood superstar, Amitabh Bachchan, for an ad does not come cheap. And even if one were to ignore that as a one-off, one-time promotional activity, it would be foolish to ignore the back to back ad slots OnePlus booked during a high-profile Champions Trophy cricket match between India and Pakistan, which again should have cost the company quite a lot. Last but not the least was handing out Rs 1 crore to a contestant during the OnePlus 5 launch. All this marketing money could have easily been spent elsewhere – in fact, in the past, OnePlus claimed it was able to offer phones at affordable prices because it kept its marketing costs low or negligible. That seems no longer believable.
OnePlus has now started focussing on the offline segment as well. The newly found aggression in marketing and distribution is taking a toll on the company’s pricing to some extent. I personally feel that most of us in India have been immune to price bumps to quite some extent as OnePlus has had an exclusive tie-up with Amazon and it is known that e-commerce companies subsidize the price of exclusive smartphones sold on their platform. However, the international pricing of OnePlus smartphones that do not enjoy any such subsidy has clearly been on the rise. The OnePlus One was 269 Euros, OnePlus 2 was the same price, OnePlus 3 ended up at 400 Euros, and finally, the OnePlus 5 has landed at 500 Euros (a colleague had pointed out that OnePlus seemed to be aiming for the premium segment as early as last year). In short, the price of OnePlus smartphones has steadily increased over the years.
Following familial footsteps
In fact, it is not difficult to see that OnePlus is following the same path as its sister companies Oppo and Vivo. Investing aggressively in marketing is something that Oppo and Vivo do as was witnessed by the staggering Rs 2199 crores spent by Vivo for the IPL title rights. Having a strong offline presence has always been Oppo and Vivo’s stronghold, and even OnePlus seems to be dipping its toes in the offline market. Oppo and Vivo have always drawn inspiration from the iPhone, and OnePlus 5 did the same this year, quite blatantly so. With the price increases that are accompanying every smartphone release, OnePlus is also slowly losing its pricing advantage.
I still think that OnePlus 5 is a very solid smartphone, and even now, not many smartphones in the market can give the same price to specs ratio that OnePlus 5 provides. OnePlus might have been aggressive with marketing and distribution this year, but its prices in India have not increased substantially. So all in all OnePlus is still on the right track at least in India.
However, what if OnePlus starts fudging with its core differentiators by following Oppo and Vivo’s lead? OnePlus 5 looks like an iPhone externally, but Oxygen OS is still largely stock Android. But what if by OnePlus starts adopting an iOS-like UI for OnePlus 6? E-commerce subsidies will not last forever, so how will OnePlus manage to keep the prices low in future with the advertising extravaganza it has embarked on currently?
Both Oppo and Vivo have a larger market share than OnePlus in India, so it might make financial sense for OnePlus to go on and mimic its sister companies even more. Similarly, there has been a gradual shift in OnePlus’s target market. The company is no longer contenT with servicing hardcore tech enthusiasts but wants to cater to a much broader set of people.
Some might accuse me of exaggeration. Perhaps OnePlus might remain the darling of the geeky, hardcore smartphone enthusiasts in India for years to come. However, one has to admit that the OnePlus of 2017 is a very different company than the OnePlus of yesteryear. Some would call it ‘reaching maturity’, but there’s a real chance that this adolescent phase of OnePlus might end up converting the company into something it was never intended to be. Or something very similar to its BBK siblings. That is one return to roots not too many are keen on seeing.