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OnePlus 8 Pro marks the improbable rise of the Chinese phone maker
This story is part of Generation China, CNET's series exploring the nation's technological ambition.
BlackBerry. HTC. LG. Motorola. Microsoft. Nokia. Facebook. Even Amazon. The roster of companies that have tried to win over US smartphone buyers -- and failed spectacularly -- is long. Some dominated the era of flip phones but couldn't transition to touchscreen devices. Others tried to expand their software prowess into smartphones but found few takers. None could compete with Apple and Samsung, which today sell two out of every three phones in the US.
But over the past couple of years a small player has defied the odds and gained ground: OnePlus.
The Chinese company, owned by the same parent organization as fellow handset makers Oppo and Vivo, sells a tiny number of phones compared with Apple and Samsung. In 2019, OnePlus ranked No. 8 in the US market with 0.6% market share, according to Counterpoint Research. But its unit sales more than tripled last year, by far the biggest percentage gain of any company in the US market, the firm said.
That growth came with basically no money spent on traditional marketing, unlike Samsung, which blankets the globe with ads when its new devices hit the market. And it came at a time only one carrier -- T-Mobile -- pushed OnePlus phones in the US.
It's part of the unlikely rise of a company that is as far from a household name as you can get. While other big players like Samsung and LG rely on a family of products -- such as washing machines and televisions -- OnePlus focuses on high-end phones and holds just two launch events each year. The company's success in the US looks similar to HTC's rise in the early days of Android. But where HTC was able to succeed by staying ahead of the competition in the relatively immature smartphone business, OnePlus has seen its gains come despite entrenched players like Samsung and Apple dominating the field.
OnePlus has a couple things to thank for its rise. It's had rabid, loyal fans since its first phone debuted in 2014. It's also had a unique value proposition: offering high-end specs at a lower price than the big two. Its devices are no longer as cheap as they used to be -- the starting price for a OnePlus flagship phone has soared 75% since 2016 -- but it still has that diehard fanbase.
OnePlus has another thing going for it. Unlike LG, Nokia and others with long histories in the phone industry, OnePlus has no baggage. Sure, it isn't a household name, but it also doesn't have to figure out how to balance its past with the future, something that took down giants like Nokia and BlackBerry.
"You're giving brand recognition up," Techsponential analyst Avi Greengart said. "But in exchange, you're getting very good software, very fast performance, and a price point [that's typically] $200 or $300 under Apple or Samsung."
OnePlus on Tuesday unveiled its newest flagship phones, the $699 OnePlus 8 and $899 OnePlus 8 Pro. Both devices come with 5G, long battery life, top-of-the-line Qualcomm Snapdragon 865 processors and, for the first time, a water and dust resistance rating. The OnePlus 8 Pro features a 120Hz display and a four back lenses, including a telephoto camera, while the regular OnePlus 8 sports a 90Hz display and three rear cameras.
With the new phones, OnePlus builds upon its relationship with T-Mobile and adds a new partnership with Verizon, the nation's largest wireless carrier. The OnePlus 8 runs on the new super-fast 5G network from T-Mobile, while a customized OnePlus 8 5G UW -- basically the same phone as the OnePlus 8, but with different 5G bands -- will come to Verizon for $799. If you want the 8 Pro, you have to buy it directly from OnePlus or Amazon on April 29 in North America.
Success isn't guaranteed. The new phones come as the world grapples with the novel coronavirus pandemic. The economy is crashing, millions of people are out of work and over 2 million people around the globe have been infected with COVID-19, the respiratory disease caused by the novel coronavirus. Smartphone shipments are expected to hit a 10-year low in 2020, and no one's clamoring for new devices. Companies like Samsung have been introducing less-expensive phones that undercut OnePlus pricing.
And as a cautionary tale, HTC's sudden rise in the smartphone business is only matched by its fade into obscurity.
Still, OnePlus likes its odds.
"We're confident that the OnePlus 8 Pro ... competes among the best of the best in the industry and still at a more affordable price point," Pete Lau, the phone maker's CEO, said in an email interview ahead of the launch.
The ones who came before
Nokia, with its popular flip phones, ruled the mobile phone market for 14 years -- until 2012 when Samsung ousted the Finnish company from its perch. Nokia made popular feature phones, but it struggled to compete in the high-end phone market. Not even Microsoft's backing could help. Nokia and BlackBerry, another once high-flying mobile device maker, missed the move to touch-screen devices and didn't respond fast enough to Apple's first iPhone, released in 2007.
The same thing happened to LG, another leader in the flip phone market. Over the years, it has released regular smartphones and experimental devices like modular phones, but it's never had a real hit. Many consumers don't remember it even sells phones, and few carriers offer its latest devices.
"LG is a little confused as to what they want," Creative Strategies analyst Carolina Milanesi said.
Motorola, which invented the cellphone, also missed the smartphone shift. It was bought and sold by Google and then bought by Chinese PC maker Lenovo. It essentially gave up on the premium smartphone market, instead opting to release inexpensive phones with lesser specs than other flagship devices. Last year, it made its first move back into premium phones with its Razr foldable and said it would launch high-end 5G phones in 2020. Motorola's phone unit sales have risen for the past two years, up 70% in 2018 and 22% in 2019, according to Counterpoint. But the company still faces an uphill battle to win back premium phone buyers.
While some one-strong handset makers were slow to make smartphones, HTC quickly jumped into the market. The Taiwanese company built the first Windows Mobile phone, but it really started making waves after introducing the world's first Android smartphone, the T-Mobile G1, a year after Apple started selling the first iPhone.
HTC initially made sleek hardware loved by reviews and consumers, but it didn't have nearly the marketing footprint of Samsung and Apple. It then created several flops (like the ill-conceived HTC First Facebook phone), stretched itself thin by designing too many different products and hurt its chances by forming too many carrier exclusives. As Android matured and heavy hitters like Samsung moved in, HTC hit a wall. In 2011, HTC shipped 11% of all smartphones in the world, according to Strategy Analytics. Today, it's virtually nonexistent in phones.
Amazon, meanwhile, introduced its Fire Phone in mid-2014. The device ran Amazon's version of Android, which didn't come with Google services like Maps or even common apps like Starbucks. Within two months, AT&T dropped the price from $200 to just 99 cents with a two-year contract. Amazon never made a second Fire Phone but instead channeled its focus into becoming the biggest vendor of smart speakers in the US.
Growing in the US
OnePlus, still relatively unknown by much of America, boasts a cult following. It sold its devices directly to customers online in the early days using "flash sales," during which the products sold out quickly.
"People feel they're a bit of a cool secret," Technalysis analyst Bob O'Donnell said. "They've always been well perceived … to make very good products that are well specced and well designed."
While other companies throw splashy press conferences at trade shows, OnePlus is the one usually holding a fan event at a local club. Co-founders Lau and Carl Pei have used social media to tease and sustain interest in their products.
OnePlus is Chinese, but it hasn't faced the problems experienced by other Chinese handset makers when it comes to the US market. Huawei is the world's second biggest phone maker, but it's all but banned from the US because of national security concerns related to its networking business. ZTE has struggled to rebuild from its brief ban for selling US-origin equipment to Iran. Oppo doesn't sell anything in the US, instead leaving that market to OnePlus. And Xiaomi still hasn't come to the US despite saying for years that it planned to do so.
OnePlus, meanwhile, has gradually been making inroads with carriers, something that's vital to expanding its customer base beyond its loyal fans. In the US, the vast majority of consumers still buy smartphones through their carriers.
In mid-2018, OnePlus struck a deal for T-Mobile to carry the OnePlus 6T in its stores, the first time a US carrier sold OnePlus phones. Thanks to that pact with T-Mobile, the company sold 249% more units of October 2018's OnePlus 6T in the US in its first 30 days of availability than the company's flagship phone from earlier that same year, the OnePlus 6.
Sprint, which is now owned by T-Mobile, last year carried OnePlus' first 5G phone, the OnePlus 7T Pro 5G. And now Verizon too will offer OnePlus phones. (In the past, OnePlus phones ran on Verizon's network, but the carrier didn't officially sell or support them.)
"Carrier support is the most important thing if any brand wants to make it big in the US," Counterpoint Research analyst Neil Shah said. "That's what makes the US market very tough to enter."
Since OnePlus doesn't have the money to fund a massive global marketing campaign, it will be counting on Verizon and T-Mobile to do the heavy lifting. But Verizon, for one, said not to expect a big TV campaign as most of its ads right now are focused on supporting consumers during the COVID-19 crisis. Instead, Brian Higgins, head of device and consumer products at Verizon Wireless, hinted at a "broader approach" that included more digital and social promotion.
And it will lean on the OnePlus community.
"That one-to-one aspect was really interesting to us," Higgins said. "It's one of the reasons why they've done so well."
Boosting prices
If there's anything that could be a stumbling block, it's the steadily rising prices of OnePlus phones.
It's not alone. Samsung and Apple have been jacking up prices over the last few years. But people watching their budgets are unlikely to spend $1,000 on a new phone right now. Even before the pandemic, people were pushing back by waiting longer to upgrade their phones or opting for less expensive devices. The coronavirus is hurting both production and sales, as well as slowing the expansion of 5G wireless technology.
This trend could hit OnePlus hard. The company's phones have generally cost about a third less than models from Apple and Samsung, but the gap between its prices and those of its rivals have narrowed. The OnePlus 8 is nearly double 2016's OnePlus 3, which retailed for $399, while the Pro variant is even more expensive. And the OnePlus 8 is the same price as Apple's popular iPhone 11.
Both OnePlus models tap into the new, super-fast 5G networks, and the pricing makes them two of the cheapest 5G phones available. Samsung's new Galaxy S20 phones, all of which are 5G-enabled, start at $1,000. OnePlus' first 5G phone, last year's OnePlus 7 Pro 5G, cost $840 at Sprint. When it hit the market in late August, it was the cheapest 5G phone in the US.
But Samsung and other companies are targeting even lower 5G phone prices in the US in the coming months. Samsung this summer will sell two new 5G A Series midrange smartphones for $500 and $600. Like the OnePlus 8 and 8 Pro, the devices have high-end features like four camera lenses and optical fingerprint readers. And Chinese giant TCL, best known for its TVs, will sell its first TCL-branded 5G phone in the US for $399 later this year. The company hopes that pricing will help it immediately attract buyers as it tries to build its brand outside its BlackBerry and Alcatel labels.
If you're a Verizon customer, you'll be paying $100 more for OnePlus' base model phone, thanks to the flavor of 5G the carrier uses. But even then, Verizon and OnePlus think the OnePlus 8 is still a good deal.
"OnePlus' value proposition hasn't changed," Lau said. "We are still committed to providing the best possible user experience for a more accessible price."
Now we'll see if OnePlus fans agree.
CNET's Roger Cheng contributed to this report.
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