OnePlus Founder: The Differences Between OnePlus and Xiaomi

Yesterday OnePlus launched their new flagship device OnePlus 5. Here is an interview almost 3 years ago with OnePlus founder Peter Lau, at that moment their first generation product OnePlus One just made its debut.

Recently, the British magazine “Connect” published the following: “What the Moto G did for the budget end of the market, providing impressive specs for a previously unseen price, the OnePlus One is now doing for the high end.” For a Chinese mobile phone brand like OnePlus, this type of praise is rare.

From its initial release, OnePlus was clearly unique. For example, upon its release, the company announced a cooperation with the well-known Android Rom brand, CM (CyanogenMod). The team behind Cyanogen is the world’s largest Android third-party compiler team, and the release of Android 2.1’s core CM5 system ROM was widely used, and was deeply appreciated by Android enthusiasts. In addition to cooperating with CM, OnePlus concurrently approached the ecosystem with an open mind, including with players such as Smartisan OS and MIUI. In order to differentiate itself by the way it feels in the palm of the user’s hand, OnePlus collaborated with a Japanese paint company to create a special “Baby skin” coating from cashew extracts.

As compared with other emerging brands, OnePlus is an anomaly. Some industry experts believe that it can become Xiaomi’s competitor; others believe that the company, which does not have its own ROM, is a small brand that is just a flash in the pan…

Who is OnePlus, and what does the brand aspire to become? GeekPark interviewed the company’s founder, Pete Lau. This former OPPO executive’s favorite saying is “Core Difference.” He believes that OnePlus has its own distinct personality. Lau does not want to become like another product, or to copy another product. In his words: “Xiaomi and I are actually not similar.”

Born International

In contrast to other Internet products such as WeChat and Xiaomi, from the very beginning OnePlus has focused on the international market. Indeed, very few Chinese companies have been able to garner the type of attention the company has in tech communities overseas.

Of course, this focus on international markets has been due in part to its partnership with CM. Globally, CM serves as an enthusiast that understands the Android ROM brand. It has gained a reputation for being fast and streamlined, garnering recognition as a top product.

According to official numbers from OnePlus, the company’s total active users overseas exceeds 5000 daily, and its monthly PV is close to 20 million. The countries with the most number of users are the U.S., Germany, and Italy; within China, the number of active users has exceeded 10,000 daily.

As part of its strategy for tackling international markets, OnePlus has from early on hosted forums outside of China. In April of this year, prior to its official product release, OnePlus directly shared its product specifications with users, as well as explained its reasons for selecting these parameters. Within the world of mobile Internet, this was an unfathomable strategy, and the move garnered the attention and approval of overseas users. Peter Liu deeply knew that the mobile phone industry has matured as of late, and that production and manufacturing abilities have been boosted significantly. Thus, in order to garner attention, mobile phones must be meticulously produced.

Within a series of overseas marketing activities, “Smash Your Phone” provoked an entirely new wave of discussion. For the chance to purchase a OnePlus phone for 1USD, as well as three exclusive invitations to purchase the phone, participants were asked to upload a video of their smashed phone onto YouTube. Options for phone purchases included, among other brands, an iPhone 5s, Samsung Galaxy S5, and Xperia Z.

OnePlus phones with CM Rom Installed

Pete Lau has become familiar with and adept at selling to international markets

Before he became an entrepreneur, Pete Lau was in charge of OPPO DVD’s overseas marketing. OPPO Blu-ray players were first sold in the United States in 2006. All of the sales were done online, with promotions occurring within online discussion boards, and a new Beta iteration of the product being released every week. Afterward, OPPO Blu-ray DVDs defeated brands such as Japan’s Tianlong and Sony, and even converted some American celebrities into fans. For example, Leonardo DiCaprio, famous for his role in the movie “Titanic,” became one such fan, and was later brought on as a spokesperson.

Following the success of OPPO Blu-ray DVD in interactive sales, Pete Lau confidently believed that it would not be difficult to replicate this success in mobile phones. After all, as compared with the initial situation of needing to rely on DVD software to understand consumers’ thought processes, the effectiveness of the Internet in magnifying these thoughts is greater, and thus the bar for the sales process has been lowered.

In 2012, Pete Lau represented OPPO on a visit to India, to learn about the market. Once there, Lau felt as if he had stepped into a gold mine. At the time, Indonesia was BlackBerry’s largest market, and outside of Blackberry and Samsung, competitors were scarce. Soon afterward, OPPO entered India, and within the first year, several hundred thousand phones were sold every few months.

Although China’s domestic market for mobile phones is messy, there exists opportunity overseas. In mature overseas markets, there is an emphasis on quality of mobile phones, and OnePlus is the only phone besides Google’s own Nexus that has primarily been sold online. Overseas, by applying e-commerce tactics, the Nexus has achieved conversion rates of up to 80%.

OnePlus separates the international market into three regions: North America, Europe, and Asia. In North America, the brand relies on growth through word of mouth. In Europe, where the average prices of electronics are high, OnePlus relies heavily on online sales channels. In the developed regions of Asia, such as South Korea, Japan, Singapore, Malaysia, and Taiwan, the company focuses on its brand influence, as well as its corresponding penetration into the China market.

OnePlus believes that opportunities exist both internationally and domestically; pressure on the domestic market makes it easier to penetrate.

Different philosophies regarding supply chains

“I consider these supply chain partners my brothers; we often drink together.”

As compared with the ever-energetic Lei Jun, Pete Lau has more of a calm vibe. Pete Lau admits that, if he treats supply chain providers as friends, others will choose to believe in and support you. For example, the year he was working on DVD, he chose to work with MTK Chips; later, when it came time to manufacture the Blue-ray DVD, OPPO waited to receive MTK’s proposal even though other providers approached him first.

This method of operation contrasts with the often-aggressive Xiaomi. In the past few years, Xiaomi’s spectacular growth has likened it to a speeding car, constantly requiring better parts in order to maintain its increasing speeds. In order to ensure that it would be able to grow independently in the future, the company did not want to be tied to any outside entity, refusing to have its growth slowed due to a supplier.

Currently, OnePlus’s decisions sit in stark contrast to that of Xiaomi, which aspires to be free of constraining ties to suppliers and to forge purely “financially driven” relationships. Xiaomi harbors an “Internet subversion gene,” while OnePlus strives to become friends with its suppliers. Currently, OnePlus only uses Qualcomm chips. In Pete Lau’s view, OnePlus’s choice of Qualcomm is not sorely for the purpose of being its partner, but also for being its strategic partner; he believes that core providers should not serve solely as passive providers.

As someone familiar with traditional industrial supply chains, Pete Lau believes that the Internet is not fundamentally different from that of traditional business— it is just that the noise Xiaomi creates is so great that everyone forgets the essence of the product. For example, Lau believes that Xiaomi’s online processes have have disrupted typical operations of traditionally offline brands; in the face of keeping up with Xiaomi’s dizzying speeds, even large brands have left behind their own original standards and qualities, and have entered the competition for ever-lower prices and fierce marketing.

This negatively affects the entire supply chain, as people begin to focus less on creating “good products.” This overlooks the fact that users do not actually want cheaper products, but excellent products that exceed expectations. The creation of these types of products requires a supportive supply chain environment, which is made more difficult by focusing solely on the simple metric of “price.” This unbalancing negatively affects the entire product creation ecosystem.

Pete Lau joined BBG in 1998, where was greatly influenced by the head of the company, Yongping Duan. After he left OPPO, Pete Lau went to the United States, where he visited Yongping Duan, who reminded him that the core essence of business is timeless. The reasons for Vivo and OPPO’s successes relate to their call to “duty.”

In addition to Yongping Duan, Pete Lau also looks up to Shijian Chu（Who is a old generation Chinese entrepreneurs, who was in jail for years), and has always been a quiet fan of his. Lau considers these individuals examples of true “product people.” He believes that once Xiaomi’s model has been deeply seen and understood for what in it is, people like him, or entrepreneurs who have both a background and relationships in traditional manufacturing, will begin to play to their own native strengths.

“Make the Logo 500 times larger, the Apple Logo is not very neat; in contrast, Xiaomi often encounters problems. Xiaomi does not select the highest quality material, instead optimizing for mass production. In terms of artistic and production value, Xiaomi is still one of the later players. It is unable to be like Apple, which selects whatever materials it wants. China’s mobile phone brands need more time,” insiders have previously conveyed this example to GeekPark.

Within the hardware manufacturing industry, the two metrics of production quantity and product quality are like two scales: and the adjustment process is an iteration which requires time and experience. As someone born of the mobile phone industry, Pete Lau has an intimate understanding of the manufacturing, design, and production processes. Thinking that is too far removed from the process of design are like castles in the air.

Pete Lau says that, while he was at OPPO, he once spent time and money hiring European designers to create the OPPO’s sleek industrial design. Although he was able to generate some great designs on paper, these designs were not able to be fully expressed given the existing materials. This type of problem is common in hardware innovation.

“For example, the back of the iPhone 5c is made of a porcelain-like material; this type of material is kept highly secret. Various aspects, including the temperature of the materials that go into the product, as well as the time pressures and controls that help create it, are under rigid standards; in fact, within China, there is currently no other company that can create at a similar standard.” Lau says that in fact, because he is all too familiar with these topics, OnePlus does not dare to rely on ideals of “vision and courage” to achieve its outcomes. Many years of experience in manufacturing and product branding have led Lau to believe in the importance of niche branding and word of mouth marketing.

Objectively speaking, Pete Lau must create a company that is different from Xiaomi in its style as well as its market positioning. This includes investment the appropriate sales and marketing resources into overseas markets; and creating a different type of supply chain, to ensure that the brand remains strong and unique.

It is too early to tell whether or not OnePlus will be able to carve out a “different type of path” long-term. However, the mobile industry is made more interesting by the existence of these types of companies— more so than if it only had players such as Xiaomi, Huawei, and Lenovo.

 

This article by Saoyang Hu originally appeared in GeekPark and was translated by Pandaily.

Click here to read the original Chinese article.