Can OnePlus Actually Sell 3-5M Smartphones in 2015?

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In a recent interview with CNBC-TV18, OnePlus CEO Pete Lau was asked what his expectations are regarding shipments and revenue for 2015. In response the Chinese CEO simply stated: “Sales target this year maybe 3-5 million…Maybe a billion dollars by the end of the year.” Pete Lau seems quite confident considering how young OnePlus is. For comparison, the company generated $300+ million in revenue from approximately 900,000 units (derived from revenue, actual numbers not available) in 2014. That means they expect shipments and revenue to grow between 333% and 555% following the year in which they released their first and only device. A very astonishing growth rate if they manage to reach their targets, which begs the question: can they actually do it? Unsurprisingly, the answer to this question is not simple.

OnePlus, founded in December 2013, had nothing short of a tumultuous first year of operations. The announcement of its first device, the OnePlus One, in April 2014 garnered much attention and fanfare for the fledgling company. Touting its first device as the “flagship killer” and adopting the slogan “Never Settle”, OnePlus certainly had high aspirations for its first device, and by and large they delivered. The OnePlus One was simply revolutionary, particularly for Western consumers, as the device offered so much for much less than their competitors. It quickly became known as the de facto device for hardcore enthusiasts, a symbol you were “in the know” or a “true techie”, a space only the Nexus line had previously occupied.

However, despite how much we loved the OnePlus One in and of itself, the actions of OnePlus did not always generate the same warm, fuzzy reactions. To start, the invite system, while necessary for manufacturing and financial reasons, was not well-received. Then came reports of poor customer service (a growing pain any upstart company goes through), and several off the mark marketing campaigns; “Smash the Past” and “Ladies First”. Nonetheless, OnePlus managed to have a very solid first year with respect to smartphone sales. Their mix of both positive and negative press excited people, you simply had no idea what the company would do next, which generated a lot of buzz. In 2014 OnePlus garnered 100,000 social media mentions, 156k Google+ followers, 50k YouTube subscribers, 190k Twitter followers, and 1.1 million Facebook fans; these numbers are simply staggering for a small Chinese smartphone manufacturer in its first year of existence.

Undoubtedly the swarm of attention surrounding OnePlus had a positive impact on their sales. It made them much more visible to consumers outside of their domestic market. Unlike many other Chinese OEMs OnePlus doesn’t rely on the Chinese or East Asian market for sales; 39% came from East Asia, 32% from Europe, 22% from America, and 7% from India. In contrast, Xiaomi, another young but wildly successful Chinese handset manufacturer, relies entirely on East Asian markets with most of their sales coming from China. In their first year of operations (2011) they shipped only 300,000 units; the following year (2012) they shipped almost 7.2 million, a jaw dropping 2400% growth rate.

In its first year OnePlus tripled the sales of Xiaomi; they are starting their second year from a relatively strong position. Xiaomi relied entirely on Chinese consumers when it grew 2400%, whereas OnePlus has established global reach, thus they have access to more markets that can drive growth. Although China was certainly a burgeoning market in 2012 demand for smartphones has started to taper recently, which would have significantly hampered Xiaomi’s growth in 2012. This is not the case with OnePlus, falling demand in China won’t hurt their sales significantly. Since OnePlus does not rely on any particular region or country they are insulated from falling demand in any particular market. All things considered the growth rate of 333% to 555% that OnePlus’ CEO Pete Lau is targeting this year actually seems quite reasonable when you compare their current position to that of Xiaomi following their first year.

One point of contention that must be quickly addressed is the nonexistent relationship between OnePlus and Cyanogen. The fact that Cyanogen OS was available on the OnePlus One certainly helped it gain popularity in international markets; Cyanogen CEO Kirt McMaster recently accused OnePlus of building their brand on the back of Cyanogen. While there is certainly some truth to this point, enthusiasts in Western countries were keen to use a Cyanogen powered device because it resembles stock Android in terms of design and adds some nifty customization features. By and large Oxygen OS, OnePlus’ in-house ROM, does just that: it is stock Android with some added customizability, potential buyers shouldn’t be dismayed by the disappearance of Cyanogen OS.

If OnePlus manages to improve upon the OnePlus One without drastically increasing the price of this year’s OnePlus Two it is very likely Pete Chou’s company will reach its revenue and sales targets. They have solid hardware in an appealing package at very competitive prices. They have a globally recognizable brand and are a magnet for press. They have a loyal fan base of  technology enthusiasts. And, most importantly, they have a strong presence in both East Asia and international markets. Add all of these factors up and we get an equation for success OnePlus would have to be completely daft to screw up. Here’s hoping that they don’t.