OnePlus, a Chinese Smartphone Maker, Opens Up About Its Missteps and Global Push

[Majinferno]

 

WSJ: What is OnePlus’ business model?

Pei: We’re selling the phone basically at cost, we’re making very little money per device and our hope is through this,we  gain a lot of users and a lot of traction and later on we can convert these users and monetize them through software and services. The way we see things is that hardware is increasingly becoming the distribution vehicle for software.

WSJ: Why are you selling globally when you’ve only just started in China?

Pei: Looking at the current status, our sales outside of China are set to surpass our sales inside China this year already. I think timing is really good on the global side. From day one, OnePlus has had a global team. Out of 50 people, a third of us are from North America, a third from Europe, and a third from Asia. It’s been a very global focus from the very beginning.

WSJ: How is OnePlus addressing heightened concerns about data privacy and cybersecurity threats in China?

Pei: All our global data is stored on Amazon servers in the U.S. I think it boils down to understanding your users and what they worry about and acting in their best interests. Whether we like it or not, China still has a very poor image globally. Before, it would be because of the poor product quality and now increasingly it’s because of cyberwarfare between different countries.

WSJ: What have been some of the more valuable lessons for the company as it has ventured abroad?

Pei: In the beginning, we were very cocky against other brands and although this attracted a lot of attention, it also built up a lot of expectations for us. Still today we’re seeing that a lot of people are holding us to the same expectations as the established smartphone manufacturers. Another thing is, selling hardware is very difficult. Once you start actually shipping this product in bigger quantities, you start to realize that the infrastructure you’ve built is breaking down. Our logistics never planned for this scale, our customer support never planned for this scale.

WSJ: What about the criticism OnePlus has drawn for some of its marketing campaigns? You held a “Ladies First” contest in which you invited women to share pictures of themselves with the OnePlus logo to win a chance to buy the phone, a contest that some called sexist and offensive.

Pei: With the ‘Ladies First’ campaign, I think the original goal was not what it became. We kind of wanted to give (women and girls) an easier way to purchase the phone, make them feel more involved in our community. When we designed that concept, we didn’t supervise the content enough and it was written in a very distasteful way and we totally understand why everyone got so upset about it. A clear misstep on our part and we’ve learned how sensitive people can be regarding these issues.

WSJ: How have you responded to complaints about OnePlus’ tactic of selling its phones by invitation-only and making them simply too hard to get?

Pei: With invites, you’re 100% sure we already have a phone reserved for you. One of the main problems that we face is that we do not know how many phones we should make. If we make too few phones, people will be screaming at us. If we make too many phones, we end up with excess inventories which you’re not able to sell. As a new company, you cannot afford to have excess inventory because that will force you to close down. At the end of the day, you can be really upset about OnePlus, you can call us names, but internally we think we’re doing something valuable for the customer, we’re helping them change the more unfair business models in the industry and we’re providing choice in the market.

Source: http://blogs.wsj.com/digits/2014/12/11/chinese-smartphone-maker-oneplus-on-its-global-push-missteps/

 

I think it's really nice to see them address some of the more frequent questions. It's a learning process for all of us and I appreciate Oneplus trying to mature as they enter the market. They haven't even been up for a year yet. What they've done within that year is a bit overwhelming. Hopefully we can see some more improvements done the road. 

Feed back appreciated.

-Majinferno

[Fate]

I'm glad to see a company owning up to their mistakes, unlike a few others recently *cough* Kingston *cough*.

[dizmo]

So they still refuse to see that a PREORDER system would sort all of this out?
Open up preorders where people pay, and you'll know exactly how many units to produce, and you're going to get the money; they've already paid.

They're idiots when it comes to sales.

[VincentC]

What Pei has said is what any OPO owner or follower already knows, it is the circle jerking people at r/android and the internet that continues citing problems and rumors that already have been investigated and addressed.

[VincentC]

So they still refuse to see that a PREORDER system would sort all of this out?

Open up preorders where people pay, and you'll know exactly how many units to produce, and you're going to get the money; they've already paid.

They're idiots when it comes to sales.

Did you read the article, they can't remove the preorder system because that would cause an excess of goods that will go unsold. Oneplus is currently not turning a profit and removing the preorder system will cause the Oneplus company to close down even quicker. 

[dizmo]

Did you read the article, they can't remove the preorder system because that would cause an excess of goods that will go unsold. Oneplus is currently not turning a profit and removing the preorder system will cause the Oneplus company to close down even quicker. 

Did you read what I wrote?

With preorders people pay ahead of time. They've paid. They know exactly how many units to make, because that's how many preorders they've received.

None of this stupid "I have to hunt for an invite" bullshit. That's NOT a preorder.

They're turning a profit, don't make that mistake. They make around $10 per unit and are on track to turn a $10,000,000 profit this year.

Not a lot, but it's nothing to shrug ones shoulders at.

[Majinferno]

Did you read what I wrote?

With preorders people pay ahead of time. They've paid. They know exactly how many units to make, because that's how many preorders they've received.

None of this stupid "I have to hunt for an invite" bullshit. That's NOT a preorder.

They're turning a profit, don't make that mistake. They make around $10 per unit and are on track to turn a $10,000,000 profit this year.

Not a lot, but it's nothing to shrug ones shoulders at.

If they opened up pre-orders to everyone, they wouldn't be able to meet the demand. The purpose of the invite system was to intentionally limit the amount of people buying the phone. It just allows people to get it earlier while also letting oneplus build up stock for it's eventual release or things like the blackfriday and christmas sale. Oneplus dose not want to be in a corner where people have payed and they just simply can't meet the demand. It'd overwhelm them as it barely takes 1-2 days for devices to get sold out through sales/preorder.

[VincentC]

Did you read what I wrote?

With preorders people pay ahead of time. They've paid. They know exactly how many units to make, because that's how many preorders they've received.

None of this stupid "I have to hunt for an invite" bullshit. That's NOT a preorder.

They're turning a profit, don't make that mistake. They make around $10 per unit and are on track to turn a $10,000,000 profit this year.

Not a lot, but it's nothing to shrug ones shoulders at.

Did you read what I wrote?

What about operation, manufacturing, shipping, infrastructure, development, and support?

Unless you can cite a source that all of these things were free then they are not turning a profit of "$10,000,000".

They had a problem when the OPO was first released that screen has a yellow band because they didn't let it cure long enough before being shipped to the customer.

Ok, so you say removing the preorder will solve the problem, that's fine now every phone is built to each specific order, that will be a four week wait time for each order compared to the one week wait we have with the preorder system.

[Norman_the_Owl]

So they still refuse to see that a PREORDER system would sort all of this out?

Open up preorders where people pay, and you'll know exactly how many units to produce, and you're going to get the money; they've already paid.

They're idiots when it comes to sales.

Except they don't want to be months behind preorder demands.

It happened with the nexus 5. There was a massive demand, and LG couldn't keep up. They were getting paid, yes, but they were several months behind on their orders, and then when the orders stopped coming in, they had tons of stock left over because they overproduced to meet a demand that wasn't there.

 

It's happened multiple times to multiple companies, and oneplus is making a wise decision in trying something different

[dizmo]

Except they don't want to be months behind preorder demands.

It happened with the nexus 5. There was a massive demand, and LG couldn't keep up. They were getting paid, yes, but they were several months behind on their orders, and then when the orders stopped coming in, they had tons of stock left over because they overproduced to meet a demand that wasn't there.

 

It's happened multiple times to multiple companies, and oneplus is making a wise decision in trying something different

While this may be true, they had many, many many months before they launched the phone where they could have had preorders open.

Take the orders. See what kind of demand there is. Then scale production to meet demand. It's not like they're working with amateur producers, the phone was made by Oppo who has more than enough experience in that area.

Considering they keep running out of stock, I don't think LG had tons of stock left over. If they had they'd be blowing them out at lower prices.

 

Did you read what I wrote?

What about operation, manufacturing, shipping, infrastructure, development, and support?

Unless you can cite a source that all of these things were free then they are not turning a profit of "$10,000,000".

They had a problem when the OPO was first released that screen has a yellow band because they didn't let it cure long enough before being shipped to the customer.

Ok, so you say removing the preorder will solve the problem, that's fine now every phone is built to each specific order, that will be a four week wait time for each order compared to the one week wait we have with the preorder system.

They don't have that many employees, manufacturing and such are included in the BOM of the device, which has been stated before and is under $300. The rest of the money, as stated below, is in support, operation, etc. And FYI operating a single office, while not a small task, is not that expensive in the grand scheme of a $10,000,000+ operation.

One of the stores I work at now does $12,000,000 a year in SALES, and employs more people. Not profit. Total sales. Profit is substantially lower than that.

They make around $10 a unit. They've stated themselves they're on track to sell 1,000,000 units by year end. They've already sold over 500,000.

They make phones in batches not for each individual. They make a batch of phones, and those are available for the order. They use Oppo's factories. Not their own.

I'm not going to get sources for you. I've posted it before. It's out there with a simple Google search.

 

If they opened up pre-orders to everyone, they wouldn't be able to meet the demand. The purpose of the invite system was to intentionally limit the amount of people buying the phone. It just allows people to get it earlier while also letting oneplus build up stock for it's eventual release or things like the blackfriday and christmas sale. Oneplus dose not want to be in a corner where people have payed and they just simply can't meet the demand. It'd overwhelm them as it barely takes 1-2 days for devices to get sold out through sales/preorder.

It's foolish to limit sales of a product when there's clearly demand for it.

"Hey, all these people want our phone, but let's only let a few people get it." Makes no sense. Honestly, at this rate it'll never reach a full release. They're already working on the next phone. This phone will never see a full blown roll out. Period.

They don't have a preorder system. Don't get their invite system confused with a preorder. Preorder is exactly that. A PREorder. Ordering before the item is ready, not after it's already made.

[VincentC]

While this may be true, they had many, many many months before they launched the phone where they could have had preorders open.

Take the orders. See what kind of demand there is. Then scale production to meet demand. It's not like they're working with amateur producers, the phone was made by Oppo who has more than enough experience in that area.

Considering they keep running out of stock, I don't think LG had tons of stock left over. If they had they'd be blowing them out at lower prices.

 

They don't have that many employees, manufacturing and such are included in the BOM of the device, which has been stated before and is under $300. The rest of the money, as stated below, is in support, operation, etc. And FYI operating a single office, while not a small task, is not that expensive in the grand scheme of a $10,000,000+ operation.

One of the stores I work at now does $12,000,000 a year in SALES, and employs more people. Not profit. Total sales. Profit is substantially lower than that.

They make around $10 a unit. They've stated themselves they're on track to sell 1,000,000 units by year end. They've already sold over 500,000.

They make phones in batches not for each individual. They make a batch of phones, and those are available for the order. They use Oppo's factories. Not their own.

I'm not going to get sources for you. I've posted it before. It's out there with a simple Google search.

 

It's foolish to limit sales of a product when there's clearly demand for it.

"Hey, all these people want our phone, but let's only let a few people get it." Makes no sense. Honestly, at this rate it'll never reach a full release. They're already working on the next phone. This phone will never see a full blown roll out. Period.

They don't have a preorder system. Don't get their invite system confused with a preorder. Preorder is exactly that. A PREorder. Ordering before the item is ready, not after it's already made.

Everyone ignore this guy, logic and rebuttal doesn't work, HE"S STICKING WITH HIS GUNS! and exaggerated statistics.

[Majinferno]

While this may be true, they had many, many many months before they launched the phone where they could have had preorders open.

Take the orders. See what kind of demand there is. Then scale production to meet demand. It's not like they're working with amateur producers, the phone was made by Oppo who has more than enough experience in that area.

Considering they keep running out of stock, I don't think LG had tons of stock left over. If they had they'd be blowing them out at lower prices.

 

They don't have that many employees, manufacturing and such are included in the BOM of the device, which has been stated before and is under $300. The rest of the money, as stated below, is in support, operation, etc. And FYI operating a single office, while not a small task, is not that expensive in the grand scheme of a $10,000,000+ operation.

One of the stores I work at now does $12,000,000 a year in SALES, and employs more people. Not profit. Total sales. Profit is substantially lower than that.

They make around $10 a unit. They've stated themselves they're on track to sell 1,000,000 units by year end. They've already sold over 500,000.

They make phones in batches not for each individual. They make a batch of phones, and those are available for the order. They use Oppo's factories. Not their own.

I'm not going to get sources for you. I've posted it before. It's out there with a simple Google search.

 

It's foolish to limit sales of a product when there's clearly demand for it.

"Hey, all these people want our phone, but let's only let a few people get it." Makes no sense. Honestly, at this rate it'll never reach a full release. They're already working on the next phone. This phone will never see a full blown roll out. Period.

They don't have a preorder system. Don't get their invite system confused with a preorder. Preorder is exactly that. A PREorder. Ordering before the item is ready, not after it's already made.

but they do have a pre-order system......

They open pre-orders once every full moon. You pay and receive a device when stock is available. They even opened up sales yesterday. You buy the phone and expect to have it to your doorstep before the 25th. Did you not know this?

[dizmo]

Everyone ignore this guy, logic and rebuttal doesn't work, HE"S STICKING WITH HIS GUNS! and exaggerated statistics.

Haha, exaggerated how? The sales numbers are public.

Even if they only made $5 profit (by the way, profit usually means clear of financial burden...so after everything else is paid) that's still $2.5 million dollars, with the units that were already sold a couple months ago when those numbers were put out.

I think the Oppo Find 7a was around $232 for BOM. So. There's that.

 

 

but they do have a pre-order system......

They open pre-orders once every full moon. You pay and receive a device when stock is available. They even opened up sales yesterday. You buy the phone and expect to have it to your doorstep before the 25th. Did you not know this?

True, they do, however that's a relatively new thing for a phone that's been out for almost 8 (or 9?) months now.

[Majinferno]

Haha, exaggerated how? The sales numbers are public.

Even if they only made $5 profit (by the way, profit usually means clear of financial burden...so after everything else is paid) that's still $2.5 million dollars, with the units that were already sold a couple months ago when those numbers were put out.

 

 

True, they do, however that's a relatively new thing for a phone that's been out for almost 8 (or 9?) months now.

Well they did have preorders in October, November, Black Friday, and now Christmas sales. It's almost like what Xiamoi does with their scheduled flash sales. Oneplus builds up stock, opens sales, and then close them once stock runs out. People then receive their device anywhere from 1-4 weeks. 

This allows them to control the flow as to not be overwhelmed. They already know how many they'll sell.

[dizmo]

Well they did have preorders in October, November, Black Friday, and now Christmas sales. It's almost like what Xiamoi does with their scheduled flash sales. Oneplus builds up stock, opens sales, and then close them once stock runs out. People then receive their device anywhere from 1-4 weeks. 

This allows them to control the flow as to not be overwhelmed. They already know how many they'll sell.

But Xiamoi does it from the initial launch of the device, not half way through it's life.

They've been teasing the phone for almost a year.

[Majinferno]

But Xiamoi does it from the initial launch of the device, not half way through it's life.

They've been teasing the phone for almost a year.

They also went straight from a startup to one of the most popular phones of 2014 in almost a year.

 

I understand you and other people are upset about the gates not opening, but you have to realize one plus simply can't handle it for more reasons than 1. This is an internal decision that they have made. I like to think of the oneplus one as a test drive for a new company. It might never go into full sale, but they'll definitely be ready for the Oneplus two in 2015. It's almost pointless mulling over the topic when info is so limited. Maybe they'll continue with the pre-order system? Maybe they'll completely kill it and build stock for full sale? Who knows.

[xtroria]

Bla3 they've made $10 million bla3. They have 50 people in working in the office and more on the production line, not included tax from chinese government, tax from other countries. Spending money on growing their market in other country and developing oneplus two.

They are still a business corporation, not a santa factory line. They need to survive and grow at the same time.

[dizmo]

They also went straight from a startup to one of the most popular phones of 2014 in almost a year.

 

I understand you and other people are upset about the gates not opening, but you have to realize one plus simply can't handle it for more reasons than 1. This is an internal decision that they have made. I like to think of the oneplus one as a test drive for a new company. It might never go into full sale, but they'll definitely be ready for the Oneplus two in 2015. It's almost pointless mulling over the topic when info is so limited. Maybe they'll continue with the pre-order system? Maybe they'll completely kill it and build stock for full sale? Who knows.

That's not too surprising, if you offer something cheap a lot of people will jump on board. Granted, they did make a fairly nice device.

I'm not upset at all that the "gates aren't open". I got a OnePlus shortly after launch and sold it shortly after that. It's not at all what they said the device would be during their hype.

*shrug* I just lost a lot of faith and interest in the company after that.

Again. They don't have a preorder system

[ComradeHX]

So they still refuse to see that a PREORDER system would sort all of this out?

Open up preorders where people pay, and you'll know exactly how many units to produce, and you're going to get the money; they've already paid.

They're idiots when it comes to sales.

Making it "exclusive" to invites makes the phone more attractive to buy.

 

PREORDER things are everywhere and everyone(at least, they should) already knows how retarded preorders are.

[wpirobotbuilder]

Did you read what I wrote?

With preorders people pay ahead of time. They've paid. They know exactly how many units to make, because that's how many preorders they've received.

None of this stupid "I have to hunt for an invite" bullshit. That's NOT a preorder.

They're turning a profit, don't make that mistake. They make around $10 per unit and are on track to turn a $10,000,000 profit this year.

Not a lot, but it's nothing to shrug ones shoulders at.

One of the goals was to not have to make them and then not to have to hold onto them for long. An invite system allowed them to do that (relatively) effectively, because they could make N phones and then give out N invites, in relatively small numbers. The lead times after the pre-order rounds were on the order of weeks.

 

With pre-orders, you have no idea how many will be ordered, so you can't get them ready beforehand. Large companies can do that with ease, small companies can't.