Having recently announced the OnePlus 3T at a relatively private briefing in London, the company's co-founder Carl Pei sat down with us to talk. In our interview we cover the device itself, the reasons for it and what the future holds for one of the most talked-about smartphone makers in the world.
What were the reasons behind releasing the upgraded OnePlus 3, and increasing the price?
Like I said during the presentation, we made a lot of changes on the software. But you cannot keep just improving software, because some of the changes have to come from hardware.
We have some new things in place like the sapphire glass, because we monitor a lot of metrics like failure rates, customer support etc. And although it's [OnePlus camera glass cover] within acceptable range, we still felt like the back camera needed to be strengthened. So we wanted to upgrade that.
We had a higher density battery that we wanted to use, and we didn't want to wait all the way until next year to release these features.
Looking at the OnePlus 3, it is our best product by far, by NPS ["Net Promoter Score" - customer satisfaction/likelihood to recommend] and basically we only look at NPS, or NPS is the most important thing to look at.
It was pretty easy, the logic was just to take the best we have and improve it.
In terms of the pricing, here in the UK I think, our users might have seen the steepest difference. A lot of it is actually due to currency. So look at the dollar price, it's not a huge difference compared to before.
But I think the reason why we increased in other markets as well as the US is we added improvements that actually cost us more money. The sapphire glass costs a few dollars more than the regular glass and the higher density battery costs more.
With the new price I really think it's a very competitive product. Look at what's available now, in late 2016 in this range, there's not a lot of products that come close to it. So we're still pretty confident.
In terms of the upgraded model and increased price, how do you think current OnePlus 3 users are going to feel? Do you think there will be many that upgrade or is that not what you're aiming for?
If you were working at a traditional company, you wouldn't expect your users to upgrade. And I spend a lot of time on Reddit, on the Android sub reddit and the OnePlus subreddit and I've seen a lot of people actually ready to upgrade.
Some people just - in Europe although we stopped sales and resumed sales - after we resumed sales still took a month to deliver. Some people have waited one month for delivery, and they've had the phone for a month before the OnePlus 3T, and a lot of people are actually selling their phones on second hand markets and various sites.
The only regret - if there was any regret - is the fact that some users had to wait too long to receive their phone. But if you looked at what options we had available, it's either stopping sales or selling with a longer shipping time. I think the latter is slightly better.
The demand was larger than we anticipated. Seems like we're saying that every year.
So that's fine with OnePlus fans, they will buy it because they're fans. How do you think it goes down with average consumers?
I think for most average consumers, to be honest, especially here in the UK, the OnePlus 3T will be the first product [of ours] they see.
Is that because it's from O2, or do you think your brand is strong enough on its own now?
O2 is just a small part of it, or it's a part of it. Starting from next week we'll start our campaign in London Underground, then newspapers will come out. We're also preparing a much larger push.
The way we think about it is, we sell to a lot of regions, but we're not big in any region. So why can't we pool the funds we have? If we make money in other regions, then we can focus on one region, and make it grow. So that's what we're experimenting in the UK. You'll see a more aggressive campaign coming soon.
You're growing as a company. People are starting to hear about you a bit more - because of the quality of your phones and how well-priced they are - do you ever find yourself thinking about adding to the range? Like with the OnePlus 2 and OnePlus X, do you see yourself going down the avenue of a small and a big phone again, like the iPhone and Pixel?
We talk about it a lot. And this is how we think: As an example I can give you - erm - a category example.
Some companies they start with a smartphone, and they struggle with a smartphone, so they will try and diversify. Thinking "I'll make a whatever product where the risk is not as high."
We think in the opposite way. If we're not even successful with the smartphone, then how can we be successful in more than one category? Because our time is limited.
And it's the same when it comes to the product sizing. Now we have one size. We're at zero or half a per cent of the UK market, once we're 10 per cent, then we can consider expanding our product line. But it's not time yet. If we can't even sell this one well, why make another one? That's the way we think about it.
Does that mean that the OnePlus X didn't sell very well?
The OnePlus X didn't sell according to our expectations. The way we thought about it before was that the OnePlus X is a slightly cheaper product. And being slightly cheaper you should sell a lot more. But what we found was that given our current size, or our current company, is that most of our users are like tech enthusiasts and they want to get the best flagship products.
So I think if another company had sold the OnePlus X, they would have done a much better job, because they can reach out to more mainstream consumers. We're learning, we're trying to learn this time, but it wasn't the right timing for us.
Looking at the OnePlus 3T, you've got the Snapdragon 821 now, which is obviously a better version of the processor, but also it's Daydream VR compatible. Was that any part of your thinking, in terms of making it compatible with Daydream VR from Google? Is that something you're considering?
So to be very honest, you can even quote me on this, I don't even know what Daydream actually is. I know it's like this reference composite design, and we were paying a lot of attention to it before the OnePlus 3. But what we found was our intuition - and our gut - told us was that no one's really going to use their smartphone strapped to their head for VR.
We've seen it as well; a lot of people were asking us if it was going to be Daydream compatible when we launched the OnePlus 3. But nowadays, no one is asking the same question.
So it's not big enough that you consider it important?
One of our core values is integrity. And integrity is not the regular meaning like being trustworthy, and stuff like that. It's defined by the core reason or core truth. So we wanted to remove all the distractions, like remove all the people nagging for Daydream, sit down and really think about it. Is it really useful right now?
That's how we make a lot of our decisions. Not only when it comes to products, but also about our markets, our product lines and categories. So integrity in thinking maybe, would be a good way [to describe it]? But I don't think Daydream today, in late 2016, is going to make or break our product.
Then what was the reason behind the VR thing earlier in the year, the Loop VR headset? Was that purely for the [OnePlus 3] launch, or was it something you cared about?
Basically, one of my - I don't know if it's a vision or if it's just one of my ideas - so after we released the OnePlus One we had a lot of fans that were really excited about the invite system. And I thought , what if we could - because our fans are so geographically spread - what if we could have a launch event where you go to a launch event in VR and other fans are sitting next to you. That would be really cool. But the tech is not really there yet so we simplified it, and that's why we had the VR experience to make it a more fair way to be involved.
This time we're trying a Facebook Live experience, so let's see how that will work. But that's more of a launch. A launch is more part of the marketing. So we can't let marketing beat the product, product needs to be above everything else within our company. And that's the way we decided, product is always number one.
You probably won't tell me anything here, but - when you're looking at the OnePlus 3T and you're looking ahead to the OnePlus 4 - what do you see now already that you think "I can improve there, I can make that in to a better product for the next model of the handset"?
So I cannot say too much about this topic, but, one part is outward looking. We have this team that's just focussed on researching the latest technologies, contact all the vendors, meeting all the vendors to see what's available.
Another part of what's really important is to be inward looking. Looking at what the feedback is from our users, then using that to improve. I don't know if you've noticed, but on our packaging it says "created together with our fans".
It's not something that we've just added as part of a marketing phrase, I do think now that Oxygen OS is actually made together with our fans. Even things that are not quickly iterating, like hardware, we actually look at a lot of feedback.
Then what are they telling you they want in the OnePlus 4?
(Smiles) We have to release the OnePlus 3T first, then see what they say.
Do you think it's always going to be an O2 exclusive or will you become more like a traditional manufacturer and have deals with multiple carriers?
This goes back to what I was saying about focus. In India, we're only working with Amazon, and it's been more than two years. Everyone else that was exclusive is no longer exclusive with anyone else.
The way we see it is if we can't make Amazon successful, we only have one partner, if we can't make that successful, then why go to more partners?
So, if we can become 10 per cent [of the UK market] some day with O2, then we can consider our next step. So it's kinda like turning it upside down, but I think it makes sense.
With O2, there's no carrier branding and no extra software?
No modifications on hardware or software.
If you went to another network provider, like EE or Vodafone, do you think the pressure would be there to add that?
Maybe, or maybe not. The thing is, with O2, they really understood us from the beginning. They were like, "if we do this [add branding and software], OnePlus fans will revolt against us. We should not do this".
But to be honest, there wasn't a whole lot of interest when we started approaching carriers in the UK. Because, that was before the OnePlus X, that was quite a long time ago. That's why we're really grateful that Magnus [O2 chief] believed in us, that's why we're not going to give up on our partnership that easily.
After we launched with O2, then everyone else wants to launch it. That's always the case.
And now you're just telling them, you can't physically do it? Due to the size of your team etc.?
Yeah, but that's a good feeling. It's like validation. They didn't believe in you and now they want you.
Would you say that all the competitors have approached you now?
In the UK, I think most of them.
The big ones?
Yeah. But it doesn't mean anything unless we can really grow together with O2. If we went to O2 and we're still the same size as now, then in a few years, no one's going to care about us.
O2 have had exclusives on other phones that haven't turned out so well. I mean, thinking a long time ago, the Palm Pre range and the Amazon Fire phone...
They did the iPhone…
They did the iPhone, which is obviously the biggest success story...
And I think it's our responsibility to make it work. We need to do the offline sales reps' sales training, we need to start reaching out to more mainstream consumers.
So introspection is also important to us, it's one of our core values. No matter who's blame it is, just take the blame and try to fix yourself. So I think it's our responsibility - no matter what - to make this work. We're trying with marketing, offline retail management, and hopefully it'll work.
Would you say that it's working now so far?
I've been actually, around a few O2 stores speaking with the sales people, and the Gurus. They said that the demand is really, really good, but it's always out of stock, and the all have a long waiting list.
So it's inventory management that's the issue, still?
Yeah, because O2 are launching a new product, they're not sure how popular it's going to be and don't want to order too much. And if they change the order too fast, we can't accommodate that change that fast.
We're working it out. I think for the OnePlus 3T it's going to be a lot better already.