OnePlus Completes a Major Shift in Strategy
The OnePlus 9/Pro are premium phones at premium prices, while Nord 10 5G, Nord N100, and the Watch are aimed at volume and U.S. distribution
Summary
BBK is remaking OnePlus as a more traditional smartphone brand. OnePlus started as a direct-to-consumer brand with a strictly limited product line aimed at technical bargain hunters. OnePlus now has multiple premium and midtier phones, and its wearables include not just headphones but also watches. OnePlus is expanding in the hopes it can steal market share from a cratering Huawei, and OnePlus is also clearly BBK’s way into the U.S. market, which requires access to U.S. carriers. To compete at the highest levels, OnePlus is investing in imaging and co-branding with Hasselblad, and its premium phones are priced in line with Samsung, Huawei, and Apple. However, a less distinctive OnePlus is much more of a threat to rivals in the mid-tier than at the high end where its brand and ecosystem are not strong enough to compete for $1,000 sales.
Source: Techsponential, 2021. Base configurations only, some currency conversions approximate. Excludes McLaren Editions and India-only OnePlus 9R. Additional chart variants available for Techsponential clients.
Context
OnePlus is part of Chinese phone giant BBK, but it originally seemed wholly different from BBK stablemates OPPO and Vivo. The actual origin story for the brand may be less romantic than the way it has been framed, but for several years OnePlus was presented as a scrappy startup making a single, obsessively-considered phone at a time, sold direct to consumers at a steep discount. Marketing and distribution costs were minimized by focusing on guerilla (and often ill-considered) online promotions, fan meetups, and healthy online forums where its customers felt part of the company. There was a brief detour with the failed fashion-oriented OnePlus X in 2015, and the company successfully added wireless earbuds and a second, higher-performance variant per year. Otherwise, OnePlus stuck with the formula: share some resources with other BBK brands behind the scenes, do minimal marketing, launch one phone at a time, and aim it at enthusiasts.
However, while it stuck to other aspects of its formula, OnePlus moved away from relying entirely on selling direct to consumers online. Retailers require their own margins, which is one reason OnePlus phone prices have been trending upward. OnePlus wasn’t the only smartphone brand to start as a direct-to-consumer play; Xiaomi started that way, too, and Huawei started Honor in response. It was great way to start, but by 2018, it was clear that retail distribution end points were crucial to continued growth. OnePlus began courting distribution partners, and today is available at major carriers and retailers globally: the OnePlus 9 series launch presentation included two logo-filled slides listing distribution partners.
Driving OnePlus’ Strategic Shift: Huawei and the U.S.
Huawei was briefly the largest smartphone vendor in the world, but after being hit by U.S. sanctions, it was left with a dwindling supply of the most advanced smartphone silicon. Huawei can’t get Qualcomm or MediaTek to sell it SoCs, can’t get foundries to build its HiSilicon division designs, and can’t use Google’s software or services that are needed to sell phones outside of China. As a result, Huawei’s smartphone sales are nosediving, and other brands are scrambling to take its market share.
BBK has another reason to move OnePlus towards a more mass-market product strategy: taking full advantage of its rare access to U.S. consumers. Getting onto U.S. carrier shelves is a feat that other Chinese smartphone vendors – and other BBK brands – found extraordinarily difficult even before the political situation between the U.S. and China deteriorated. It might be impossible for a new brand to make that leap today. LG’s exit provides another opportunity in the U.S., though OnePlus shifted strategy before it was clear that LG would stop smartphone production.
OnePlus arrived in the U.S. by selling outside the carrier channel. Many companies have tried this approach, but it usually does not work, even for well-established brands. U.S. consumers buy the vast majority of phones from carriers because carriers subsidize or spread out the cost of the phone interest-free. There are technical reasons why phones designed for Europe or Asia often won’t work fully on U.S. networks without modifications and expensive certification. However, OnePlus’ focus on budget enthusiasts attracted a significant number of T-Mobile US subscribers who bought the phone unlocked during a time when T-Mobile’s GSM-LTE network looked a lot like a European one. By adding 600 MHz support to the OnePlus 6T to match T-Mobile’s newest network build, OnePlus was able to get onto the Un-carrier’s retail shelves in late 2018. While OnePlus still only made up single-digit percentages of T-Mobile’s smartphone sales, it still exceeded the sales OnePlus had in the U.S. unlocked market. OnePlus further expanded in the U.S. with the OnePlus 8 last year at Verizon (see OnePlus Moves Further Up and In: Up in Price, Into Verizon in the U.S.). The newest OnePlus phones are not being sold at Verizon, but they are certified for use on the network, and T-Mobile’s prepaid brand, Metro, picked up the OnePlus Nord 10 5G and the Nord N100.
OnePlus In the Mid-Tier
When the original OnePlus Nord launched in Europe and Asia last year for 400€ (~$480), it created a sensation: after years of increasingly expensive flagship competitors, the Nord represented a return to OnePlus’ roots of creating affordable bargains. The original Nord is a series of well-considered compromises: money was spent on an AMOLED 90Hz display, under-screen fingerprint reader, reasonable processor and camera performance, and strong design. The $300 Nord N10 5G is more of a parts-bin affair designed to hit a price point, as is the $180 Nord N100. There is nothing inherently wrong with that, and it has helped OnePlus break into prepaid and increase sales volumes in the U.S. In fact, Wave7 Research says that OnePlus now makes up over 10% of sales at Metro, T-Mobile’s prepaid brand. However, a multitude of confusingly named and undifferentiated entry level phones sold at retail certainly shows how far OnePlus has strayed from its original business model of selling one or two phones per year to specs-knowledgeable enthusiasts on a budget. Perhaps because of this strategic shift, several key OnePlus executives, including co-founder Carl Pei, left OnePlus in 2020.
Techsponential has been testing both the European Nord and the U.S. T-Mobile-spec Nord N10 5G. Highlights of the latter include a 6.49” LCD IPS 90Hz display and sub-6 5G, which should actually bring significant speed boosts on T-Mobile and Metro in major metropolitan areas this year. Memory expansion and a 3.5mm headphone jack are nice bonuses. Performance from the Snapdragon 690 is fine for normal use but falls short for intensive gaming. The biggest disappointment is that camera performance is poor, despite a higher megapixel count than the more-expensive regular Nord. I was not expecting great low light performance at this price point, but pictures in good indoor lighting have focus and sharpness problems that really should not be issues even at $300.
In the U.S., OnePlus is primarily competing against Samsung and Motorola, with lesser pressure from TCL and Google. LG is exiting smartphones, while ZTE, once a big player in U.S. prepaid, has been forced from the market due to political pressures. The mid-tier was not a significant part of the U.S. market in the past, but that is changing, and with relatively little competition, OnePlus has plenty of room to grow. Outside the U.S., mid-tier competition is brutal, with new high-spec-low-priced phones released seemingly daily from Xiaomi, Redmi, Poco, OPPO, along with Samsung, HMD’s Nokia, and a newly independent Honor.
OnePlus review guides over the years. Personal collection.
OnePlus Flagships
Until this past year, OnePlus’ phones were not true flagships. The company always used the absolute latest and best Qualcomm Snapdragon processors and the fastest RAM, but it would strategically leave out features and certifications to keep costs down. OnePlus was also consistently behind the leaders in imaging. However, the lower price, latest processors, no software bloat, and a few signature touches – like superb packaging, strong public relations that generated ample coverage in the tech press, and a ring/vibrate/silent slider – made them seem like flagships for those in the know.
However, as Apple, Samsung, and Huawei pushed top phone priced above $1,000, OnePlus could not match the leaders’ features and carrier requirements without coming much closer to their prices. The OnePlus 8 Pro launched last year at $900; that was still a $200 discount off the super-premium iPhone 11 Pro Max or Galaxy Note 10+, but at that price point, consumers are less price sensitive, carrier incentives play a larger role, and deficiencies in imaging and ecosystem are magnified.
Investing in Imaging
Smartphone cameras have gotten good enough that most mid-tier and better phones take excellent photos in good lighting. This pushes some of the differentiation to edge cases – night modes, HDR, AI identification – but consumers still perceive that only the phones with the best rear cameras are worth paying a premium for. Apple, Samsung, and Huawei have led the smartphone imaging field, and until U.S. sanctions made it impossible for Huawei to source enough components to compete, Apple, Samsung, and Huawei were the top three premium brands. (Google’s computational photography has a vocal following among the tech press. However, this has not translated to consumer enthusiasm for Google’s Pixel phones, in part because Pixels don’t look or feel like premium smartphones.)
When OnePlus’ phones were heavily discounted relative to the competition, an imaging performance gap was an acceptable concession, but as the price gap has closed, OnePlus cannot afford to be “good enough.” To improve its position, OnePlus is investing $150 million over the next three years and has enlisted the storied camera brand Hasselblad to help. Hasselblad made the cameras used in the Apollo moon missions, and its medium format cameras are a fixture among professional portrait photographers today. The initial collaboration with includes work on color calibration – a Hasselblad signature. In the future, Hasselblad will assist OnePlus with choosing sensors and optics.
However, there is reason to be skeptical. While the NASA-themed launch made for great visuals, Hasselblad is not a well-known consumer brand. It has tried applying its brand to smartphones before, with a 10x optical zoom camera add-on for Motorola’s Z phones. If anything, that foray hurt Hasselblad’s brand; the zoom worked, but the camera took mediocre images at best. OnePlus’ $150 million figure is also somewhat suspect. How much of that is OnePlus R&D, how much is allocated to Hasselblad engineering expertise, and how much is just a marketing fee for the use of Hasselblad’s name? The early results are not encouraging. The OnePlus 9 and 9 Pro implementation is mostly cosmetic: a pro camera software mode, a delightful mechanical shutter sound, and color mapping that was not uniquely compelling in our test photos. OnePlus definitely has the right idea to focus on imaging. It remains unclear if the Hasselblad relationship will be meaningful and if OnePlus can leapfrog competitors who are also investing heavily to stay ahead.
OnePlus 9, 9 Pro
OnePlus’ latest numbered phones are true flagships, especially the OnePlus 9 Pro, which starts with the latest Qualcomm Snapdragon 888 processor and mates it to an AMOLED LTPO display that dynamically adjusts its refresh rate from 1 – 120 Hz and samples touches at 240Hz. Scrolling and animations benefit from the faster refresh rate and LTPO saves battery life, but only four games support the faster touch response. The OnePlus9 Pro has 65W fast charging and optional 50W wireless charging – faster than most phones charge while plugged in. Techsponential has review units of the OnePlus 9 and OnePlus 9 Pro. The fast charging is every bit as fast as OnePlus says it is, even on the wireless charging sled.
The OnePlus 9 Pro’s main rear camera is based on a custom image sensor from Sony. Over the course of several software updates since before launch, this camera has gone from slow-and-soft to fine-in-good-lighting. The ultrawide camera also has a huge sensor - unusual even for premium smartphones - and corrects some kinds of distortion in the lens. In our tests, the anti-distortion effect was subtle, but the added detail and light from the larger sensor was noticeable in some shots compared to an iPhone 12 mini and Huawei Mate40 Pro. The OnePlus 9 Pro also has an 8MP 3.3x optical zoom camera, but this is well behind the periscope zoom systems found on the latest flagship phones from Samsung, Xiaomi, and Huawei, or Sony’s wild dual-focal length system on its upcoming Xperia 1 III. OnePlus claims significantly improved video capture and adds HDR modes, but in practice the output is still well behind what you get from an iPhone 12, let alone an iPhone 12 Pro recording in Dolby Atmos. The regular OnePlus 9 keeps the Snapdragon 888, and while it loses a bit of camera technology, wireless charging, and the LTPO display, it is also much more affordably priced.
Pricing on the OnePlus 9 series is essentially in line with the premium competition, especially once discounts on Samsung’s line are taken into account. Given the technology included, that is perfectly reasonable, but the continued erosion of the OnePlus discount still represents a big change from the brand's original value proposition. The OnePlus 9 starts at $729 and competes with Apple’s iPhone 12 ($799) and Samsung’s Galaxy S21 ($799). The OnePlus 9 Pro starts at $969 in some markets, but the only version available for orders in the U.S. is $1069. Apple’s iPhone 12 Pro and Max are $999 and $1149; Samsung’s Galaxy S21 Ultra launched at $1199 but can now be purchased for $999 with incentives. Given both the product and brand strength of Apple’s iPhones and Samsung’s Galaxy S and Note lines, OnePlus’ modest discount alone is not going to be enough to lure buyers away from the incumbents.
OnePlus Watch
Although OnePlus was late to the market with fully wireless earbuds, it has long offered inexpensive, good sounding headphones, and its bags and backpacks are surprisingly well-designed for an electronics brand. OnePlus is now expanding deeper into wearables with its first smartwatch.
The OnePlus Watch is really a watch-shaped fitness band, and it is priced like a fitness band at $159. Choosing to limit functionality was a smart design decision on OnePlus’ part. A full smartwatch requires a refined user interface, custom silicon, and buy-in from app developers. The only watch platforms to do this well are exclusive to Apple and Samsung (and Samsung still has more work to do on the app front). Instead, the OnePlus Watch is aimed at a constrained set of applets for sleep tracking, health, and fitness, plus basic notifications.
The hardware is also limited, at least in size and design – it comes only in large (46mm), and the design is deliberately bland. (A Cobalt Limited Edition with a sapphire crystal is planned, but OnePlus would not provide shipping dates or pricing. Cobalt is a difficult material to work with – it has a 50% failure rate –so the price premium could be steep.) The Watch does have a sharp 326 ppi display, but no always-on mode. Perhaps because of that, battery life is rated at up to two weeks.
Unfortunately, despite limiting the Watch’s design and functionality, OnePlus was unable to perfect the user experience. Reviews of the OnePlus Watch at launch complained of numerous bugs, annoyances, and inaccurate tracking. Techsponential has asked for a review unit and we will update this report once we get a chance to test it ourselves.
Conclusion
As you can see from the Product/Price History chart above, OnePlus’ product line originally consisted of a single phone sold direct to consumers at mid-tier price points. This unique business model – along with resources shared with other BBK companies – fueled its growth. Over time, prices rose steadily into premium territory and OnePlus added retail and carrier distribution – including in the often impenetrable U.S. market. With Huawei kept out of Western markets and struggling even inside China, OnePlus has shifted its strategy further to take advantage, expanding its smartphone product line downward, adding more wearables, and investing more in imaging to justify ever-higher price points on the premium end. A diversified product portfolio and traditional distribution channels will make it harder for OnePlus to differentiate its brand. At the same time, it should be able to take advantage of new sales opportunities, especially in the U.S. mid-tier market.
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