How can OnePlus create a smartphone that's better built, better designed, better spec'd than the 2014 flagships, yet sell it for less than half of what more established companies charge? That's the question that has caused a lot of people to scratch their heads in the recent weeks. I've seen some strange theories floating around, and thought it would be a good time to clear some things up.
A lot of media have previously asked us how we can sell such a high quality product at such a reasonable price, and we have told them that we can save money by doing the following three things:
Dramatically cut down on marketing spend: Instead of expensive offline campaigns, try and do more online marketing and have our fans help us spread the word.
Eliminate retail channel costs: While marketing is expensive, retail is even more so. I'd estimate that retail channels can cost anywhere from 20% to 40% of the final price of a flagship device from an established brand.
Not plan to make any money for two years: We are fine with not making any money on our smartphones for two years, to give more people the chance to experience the quality of our devices, and help us build a name.
Some people fear that we'll run out of money, while others have even offered to donate to us. There's no need to fear for us going bankrupt in the next two years, and instead of donating money, you'll help us even more by spreading the word.
We want to apply the model commonly used by Silicon Valley consumer internet startups to hardware. First, create a good product. Second, use the product to attract users. Then, find a way to make money later when you have enough users. Hardware is a lot more risk than software, which is why we have controversial moves such as the invite system, that some new members haven't taken the time to understand.
We're still thinking of ways in which we could become profitable in the future, and here are some of our current ideas:
Accessories: We will not sell accessories at cost, and will keep a reasonable margin on them. If a customer buys accessories together with our device, we can earn a few dollars.
Scale: Because our initial quantities are small, our hardware costs are quite high. Once we can sell millions of devices a year, the component costs will fall and we'll be able to have a slight margin on our smartphones without raising the price.
Services: Providing services through software may be a long term solution to make some money. However, it's too early to think about it as these things require scale. This will only be interesting once we have millions of active users.
Although we're thinking about ways to make money in the future, that's not what's most important. We firmly believe that if money was the prime motivator, we'd never be successful. Instead, if we focus on creating great products and couple it with good service, customers will appreciate what we're doing and help us spread the word. In time, it will be impossible to not make money. We're thinking long term.
I hope you have found this information helpful in understanding us a bit better.
