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How will OnePlus make money?

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  1. Carl Co-founder Staff Member May 15, 2014

    Carl, May 15, 2014 :
    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 uss 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. :)
     

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  2. kr_ke Froyo May 15, 2014

    kr_ke, May 15, 2014 :
    Sounds solid! I hope, you can keep this motivation on the long term.
     

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  3. beleaf Jelly Bean May 15, 2014

    beleaf, May 15, 2014 :
    A very interesting strategy applied here by OnePlus. They truly want to create a name and good reputation with consumers. It'll be interesting to see how their model plays out in the future. As for now, I can't wait to get my hands on the OnePlus One!
     

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  4. Adam Krisko KitKat Community Expert May 15, 2014


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  5. shaheed015 Ice Cream Sandwich May 15, 2014


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  6. WhiteHartMart Ice Cream Sandwich May 15, 2014

    WhiteHartMart, May 15, 2014 :
    Thanks for the insight @Carl

    I'm sure we'll all spread the word of OnePlus - but you know the best way for all of us to market the phone is when we can demo to our friends/family/colleagues ;) :p
     

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  7. legato4 Gingerbread May 15, 2014


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  8. josedomingues Honeycomb May 15, 2014


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  9. dovakihn343 Honeycomb May 15, 2014


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  10. WhoKnew Ice Cream Sandwich May 15, 2014


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  11. script Marshmallow Moderator May 15, 2014


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  12. notjustspecs Ice Cream Sandwich May 15, 2014


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  13. Tajwar Honeycomb May 15, 2014

    Tajwar, May 15, 2014 :
    That sounds great Carl, the fact that the company saves so much money just by trusting it's fans to spread the word is truly remarkable. And unlike other companies you guys aren't all 'PROFIT PROFIT PROFIT' instead taking the approach of not making much profit for 2 years to build a solid foundation for the company which in my eyes is the important part,

    Bravo to the OnePlus team, hope we all get our 1+ devices very soon :)
     

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  14. theacer Ice Cream Sandwich May 15, 2014


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    Ayo98, mdup17, anjan2683 and 41 others like this.
  15. MF831 Ice Cream Sandwich May 15, 2014

    MF831, May 15, 2014 :
    why ya keep avoiding the update we all want! invites,contests and raffles!
     

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    mdup17, mantas001, Garman11 and 18 others like this.
  16. Alam Ice Cream Sandwich May 15, 2014


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  17. ndipaolo5 Honeycomb May 15, 2014

    ndipaolo5, May 15, 2014 :
    Thanks @Carl all posts from the OnePlus team are informative and of value to us here on the forum. Keep up the good work!
     

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    mdup17, mantas001, Garman11 and 14 others like this.
  18. gt5679a Ice Cream Sandwich May 15, 2014


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  19. shigure Froyo May 15, 2014

    shigure, May 15, 2014 :
    Interesting article. I hope you succeed and remain true to the founding principles.
     

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  20. jonmiles Froyo May 15, 2014

    jonmiles, May 15, 2014 :
    Nice to see a company willing to let it's product do the talking rather than the marketing department.

    This shows true belief in what you're doing. Keep it up!
     

    #20
    h.phips, ashish528, Kalipur and 58 others like this.