June 12, 2024


Sapiens Digital

Carl Pei on why OnePlus is coming back to fix its biggest mistake

8 min read

Who would have thought even two years ago that the key scrap in 2020 smartphone sales would not be bells-and-whistles laden flagship handsets, but the unglamorous market of mid-tier mobiles? But that’s exactly where we’re at right now. Why? Mid-tier is where the money is. People are fed up with incremental gains on devices that cost north of a grand as last year’s best tech adorns the latest phones that cost less that half the cash.

Founded less than seven years ago by Carl Pei and Pete Lau, OnePlus is now third behind Apple and Samsung for premium phone sales according to Counterpoint Research. Earlier this year the arrival of the £900 OnePlus 8 Pro seemingly confirmed that OnePlus had moved away from producing budget flagship phones. WIRED US put it bluntly: “OnePlus called itself the ‘flagship killer’. Now it’s merely another flagship phone.”

Now OnePlus is back with a second stab at a mid-tier mobile, after the first attempt, 2015’s OnePlus X, did not fare well and sold poorly. People may be more than receptive to mid-tier handsets now, but this time around OnePlus has stiff competition in the form of the iPhone SE, Oppo’s Realme X50 5G, the Moto G 5G Plus and the upcoming Pixel 4a to name just the obvious contenders. As a result, Pei is relying heavily on the OnePlus brand to make its £379 OnePlus Nord stand out.

WIRED sat down with Pei, socially distanced by a couple of continents, to talk about the new phone, the new(ish) strategy and OnePlus’s attempt to woo a new type of customer. But we start with an admission from Pei: “Personally, I am bored of phone launches. Like, I can understand sitting through the launch of the original iPhone, because it was literally changing the world, and everything showcased was new. But sitting through one hour of frivolous announcements? I stopped watching smartphone launches a couple of years ago.”

WIRED: Why is OnePlus returning to mid-tier?

Carl Pei: If you look at the evolution of the smartphone market, the flagship phones have suddenly risen in price. A lot of phones today are over $1,000. So that has caused the mid-range market to move up to fill that gap underneath.

In 2015, we made a mid-range phone, the X. Back then, the company was focused on tech enthusiasts. So although the OnePlus X was a great product, it wasn’t a great product for those guys. But today our footprint is a lot bigger. Our brand is a lot more well known. So by creating a mid-range phone now we can reach out to a lot more people.

WIRED: What will make more money for OnePlus: high-end phones or this mid-tier?

CP: Our margin is similar across the board, but because the higher end phone is higher in actual dollar terms will make more money per device sold. But then, on the flip side, we’ll probably ship more volume of the Nord – so we’ll have to see which one is most profitable.

WIRED: If Nord makes you more money, why not drop the flagships?

CP: Some consumers want the latest and greatest and some just want a device that works and has a great day-to-day user experience, so why not do both? And why would we want to move away from flagships? It’s like asking Porsche to move away from their race car DNA.

WIRED: With Huawei and the 5G rollout issues here in the UK, do you think people are going to be less bothered about Nord being a 5G phone?

CP: Well, we’ve done three rounds of preorder for the Nord, and, apart from India, the UK has been the biggest country by far, when it comes to orders. I think around 25 to 30 per cent of our European preorders have come from the UK.

WIRED: Very few consumers can tell an OLED screen from an LCD screen. Like with 5G, are these battle grounds as important to consumers as they seem in your world?

CP: I agree. Most consumers are not going to be able to tell the difference between a 90Hz display or a 60Hz one, or OLED or LCD. They don’t really know what optimisations we’ve done on the software. But they will like the product and they can’t explain why they like the product, because it’s all of these small decisions that have gone into the process that make up the overall user experience. Consumers like really glitzy things they can quickly understand. Oh, you have 100MP camera, you have 100x zoom. But are those things really necessary or useful? I’m not sure.

WIRED: Richard Yu, head of Huawei’s consumer business group, says we’ve only got one or two years left where the camera remains a battleground for smartphones. Do you agree?

CP: One spec alone cannot make or break a product. You spend so much time on your smartphone it cannot just be about one single thing. I really like this from Steve Jobs: early on, he said that a brand is like a bank account – every interaction with the consumer, with your product or your marketing or your after-sales service or another consumer talking about you, every positive interaction credits your accounts, and every negative interaction deducts credit. So a brand is not just a product. And it’s not just advertising. It’s everything you do. That’s where the battlefield is, the overall experience across all the touch points people have with you. Get all the little details perfect.

WIRED: This is the it’s the first time that you haven’t used a flagship chipset, isn’t it?

CP: It’s the first time. This time we realised we can. The 765G Snapdragon processor is fast enough to deliver the experience we want to deliver. It’s indistinguishable when you’re performing day-to-day tests. It just feels nice and smooth.

WIRED: Everything has gone wireless. Why does the Twittersphere still complain about the removal of headphone sockets?

CP: The chatter is finally dying down. People who say one thing end up acting in a different way. Sometimes people say they want a bigger battery, and they don’t care about how thick the phone is – then you give them a thick phone and they don’t want it. When you’re building products you have to listen to feedback. But you’ve got to find the underlying thing they’re trying to tell you. In the case of headphone jack, maybe they want the wireless headphones to be more affordable? But we’re still trying to parse like, why do people say the things they say, and then act differently? In the end, you have to rely a little bit on gut feeling.

WIRED: If you allow your customer base to design the product for you…

CP: …it’s gonna be a phone that costs nothing and has all the features in the world, and it’s probably gonna be humongous.

WIRED: Which brings us back to the Nord. Who did you design it for?

CP: Everybody who doesn’t need a flagship phone, and there’s a lot of these people. We’ve done a lot of focus groups and there’s a growing number of consumers who feel like each iteration of the flagships are not providing the innovation or incremental value to keep them interested. They just want a great product. We didn’t choose to focus on one thing, like a best camera. We just wanted all the things to be pretty good.

WIRED: But doesn’t the Nord make the argument for your flagships harder to justify? This phone is more than £500 cheaper than the 8 Pro.

CP: I don’t think it’s an issue, because you can see it in other consumer categories. Look at cars, for instance. There’s a lot of people who want performance cars because they are performance cars. And, like, even Porsche. They have high-performance cars, but they also have more mass-market cars. So I think it’s not a conflict. And, if we’re not going to do this then we can’t stop other people from making a mid-range phone either. We’re not living in a vacuum. So, it’s also an offensive play, I guess.

WIRED: You’ve mentioned Porsche a couple of times. Are you a petrol head or do you have an EV?

CP: I recently got a Boxter. So that’s why it’s on my mind. I didn’t want to get an electric car. I think electric cars still need a little bit more time to get there. The technology is improving, the user interface is improving. But the interior design and the interior fit and finish leaves a lot to be desired. So I think when other brands start entering the space, the product will get better. I don’t want to sit in a plastic box.

WIRED: Are you hinting at a OnePlus car in the works?

CP: It’s probably not on the cards for the next couple of years, but then it’s really hard to foresee what happens after that. I think there’s still a lot more work to do and smartphones is probably the most important category for mankind in the next couple of years at least.

WIRED: In just a few years OnePlus has gone from zero to a billion dollar revenue company. But the problem with achieving dreams is where to go next? Will you sell up? Do you want to do something entirely different? Do you want to do this for the rest of your life?

CP: I just want to do things that matter. I don’t have the perfect answer. We’re just small specs of dust in the universe. So if we can make a little bit more noise, or we can make a little bit more impact, that would be great. I do lie awake sometimes and think about our insignificance, and I don’t have a good answer on how to fix that.

Jeremy White is WIRED’s executive editor. He tweets from @jeremywired

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