Economics of OnePlus
|
Case Code: ECON060 Case Length: 9 Pages Period: 2014-2016 Pub Date: 2017 Teaching Note: Available |
Price: Rs.400 Organization : OnePlus Industry : Smartphone Countries : China Themes: Business Economics |
Abstract Case Intro 1 Excerpts
Excerpts
Background Note
OnePlus was co-founded by Lau and Pei in December 2013. Previously, they had both worked at OPPO . While Lau was the Vice President of the company, Pei was the head of OPPO’s Global Marketing and e-Commerce division. In August 2013, Lau and Pei were at a café along with some of their colleagues from OPPO, when they noticed that they were all using iPhones even though they were working for a company making Android phones. The reasons each of them gave for not using an Android Phone were bad build quality, want of a good design, lack of intuitive software, etc. According to the group, Apple was the only company that cared about its products and there was no clear second-best product-focused smartphone manufacturer in the global smartphone market. They felt that manufacturers of Android-based smartphones were just concerned about market share as opposed to making the best products...
Pricing Strategy of OnePlus
OnePlus offered devices with an industry leading design, superior build quality, and top-of-the-line specifications at a disruptive price. The phones’ pricing appealed to those seeking a high-end device without having to spend too much on it. According to some industry observers, OnePlus kept its pricing strategy very competitive and was not worried about costs while manufacturing devices. After adding up all the costs, the start-up retained a small margin for itself in order to keep its operations running and passed on the rest of the savings to the customer in the form of low prices, they added. OnePlus set the lowest feasible price for its devices in each geographical market. The prices of OnePlus devices were different in each country depending on operating costs, taxes, and other factors...
Challenges
According to analysts, OnePlus faced tough competition in the domestic as well as global smartphone market. Many Chinese smartphone manufacturers such as Xiaomi Inc. , Huawei Technologies Co., Ltd , and ZTE were offering Android phones with premium features at budgeted prices similar to those of OnePlus. The most notable device in its price range was the Nexus 5 from Google, which was available for US$349 and came with specifications similar to those of the OnePlus devices...
The Road Ahead
In the first nine months of 2015, OnePlus reportedly sold about 1.3 million units worldwide with 57% of the sales coming from the Asia Pacific region. It planned to sell 5-7 million smartphones in 2016...
Exhibits
Exhibit I: Specifications of OnePlus Products
Exhibit II: Pricing of OnePlus Products in Some Key Markets* (As of 2015)
Exhibit III: Top Ten Smartphone Vendors Based on Market Share
Exhibit IV: Global Smartphone Shipments Forecast from 2010 to 2019 (in million units)
Buy this case study (Please select any one of the payment options)
| Price: Rs.400 |
Price: Rs.400 | PayPal (9 USD) |
