'Almost 75 per cent of our total sales come from the top 50 cities in India.'
IMAGE: A model displays the OnePlus 6t.
Photograph: Ashish Narsale/Rediff.comChinese smartphone maker OnePlus, which has established itself as the leader in the premium smartphone segment in the country in just four years, is looking at harnessing the full potential in the tier I and tier II markets.
The company also plans to grow its R&D centre in Hyderabad as its biggest globally in three years, Pete Lau, founder and CEO of the five-year old Shenzhen-headquartered company, tells Bibhu Ranjan Mishra.
How has been the journey to the top in India's premium smartphone segment?
I have been a product guy and my focus has always been building our product story right.
If you look at this space, the smartphone industry over the past couple of years has changed a lot.
During this time, OnePlus has emerged very stable on its trajectory.
We entered India just four years ago, but we found tremendous amount of growth opportunity and quickly invested significant amount of our resources.
All these have helped us.
When will you start doing end-to-end manufacturing in India?
Since the OnePlus 3T was launched, all our phones are completely built out of India.
We do full assembly here through our contract manufacturing partner, while several components are being procured locally.
As more and more component suppliers enter India, that will further develop the manufacturing ecosystem.
However, it has been our strategy not to do everything ourselves.
We will focus on what we do the best.
The premium smartphone segment is a very tiny portion of the overall market in India at 3.5 per cent. Now that you are the leader in this space, what are you doing to expand the scope of opportunities?
The premium segment of the market is indeed not that large as compared to the entire segment.
We believe that the premium segment will keep growing as the Indian market continues to grow and the consumers' (purchasing) capabilities continue to rise.
So, we will focus on a long-term strategy in tapping that growth rather than trying to create lower-end products to capture the larger share of the market.
In fact, the premium segment in India is growing faster at 20 per cent as compared to the overall segment, which is growing at 14 per cent.
IMAGE: OnePlus CEO Pete Lau at a launch event for the OnePlus 6T in New York, October 29, 2018. Photograph: Carlo Allegri/Reuters
As you plan to expand into tier-II, III cities, what are the building blocks you are putting in place to tap customers?
It's true that the natural growth has come from the tier I and tier II cities in India since our products cater to the premium segment.
Almost 75 per cent of our total sales come from the top 50 cities in India and we are very much top city centric.
As we see greater growth in smaller cities, we will, of course, support the appropriate channels.
In the immediate future, our focus remains on really getting our tier I and tier II right and stabilise it.
We already have stores in Bengaluru and Chennai while one more is coming up in Delhi.
We are looking at setting up such stores in all the 10-odd tier-I cities to provide both online and offline experience as well as sales and after-sales experience.
Will Amazon continue to be your exclusive online partner in India?
You are already working with JD.com, a Walmart company, in China. Will you consider working with Flipkart at some point?
Amazon is indeed our most important partner and we expect this continue.
There was certainly exclusivity in the contract terms (with Amazon) in the first year, but now there's no such binding agreement.
It's about mutual trust and understanding, and also about delivering capabilities.
About the possibility of working with Flipkart is something we are not considering yet.
Are you taking any of the learning out of your success in India to any of your global markets?
Every country is quite different from the other in terms of market requirements.
Our strategy is very similar across the globe with the single most important focus on product and then experience.
The success that we see in India in this segment only reaffirms this positioning.
IMAGE: Media persons check out the OnePlus 6t experience.
Photograph: Ashish Narsale/Rediff.com
Do you see India continuing to stay as your largest market for long?
India is the number one market for us right now on a single country basis followed by China.
But our estimation is the US could soon become number two or even the largest market for us globally.
You have a small R&D set up in Hyderabad. Any plan to scale it up?
We have R&D presence in four locations globally, including Shenzhen, Taiwan, the US, and Hyderabad in India with a team of around 700 engineers.
We see tremendous potential in R&D space in India, especially on the software side.
We are scaling up our Hyderabad R&D centre and we anticipate that probably in the next three years, it will probably be our largest R&D centre globally.
In the US, you have forged a partnership with T mobile, to use the carrier to sell devices.
Are you exploring such strategy in India?
The US and India are quite different as markets.
In the US, a vast majority of the subscribers purchase their devices through the carriers.
So, this is very much the primary channel for device delivery to the US consumers.
India is an open market and much more diversified.
Therefore, the need of carrier channel here is not as dramatic as it is in the US.
However, we have started working with one Indian carrier (Reliance Jio) but only for a specific product (OnePlus 6T).
