OnePlus is gearing up for its big launch of the year even as there are strong hints that the company will finally move out of its one-phone-at-a-time cycle and announce multiple devices. We caught up with OnePlus founder and CEO Pete Lau in March to discuss the road ahead for his company, his product vision, challenges and opportunities. Edited excerpts:
What is your plan for this year?
We haven’t set a specific goal. But the task is to look at the premium segment and how we can broaden the kind of impact that has been created. We want to enable in the minds of the community that when they think of the best premium offering, they think of OnePlus.
Apple and Samsung both have three premium flagships now across different price points now. Is that a thought process that interests you?
As we have grown both in the premium segment and in terms of wider awareness in India particular, we have also looked at what makes sense and created a flagship series. With the new devices, like with the OnePlus 6T, we will have a continuation, a product that is able to integrate a full level of the latest in technology or technology that hasn’t even been utilised in the industry and can really push the barriers of experimentation in what a premium flagship can be.
At MWC you also showed a 5G phone. Is 5G an opportunity or a compulsion... or a combination of both?
It’s an opportunity, first and foremost because our community of users is very much those who are technology aware and would want to take up the newest technology first. So it’s an opportunity. On the 5G front, we started taking our own planning and deployment early starting in 2016 with pre-R&D and are certainly among the first and leading companies in the 5G space. In 2019 and 2020, this is very much a transition time from 4G to 5G and it’s an opportunity for us, a very good opportunity.
What will be the big user benefit from moving to 5G?
5G is very much a long-term approach and trajectory. If we look at it over the next 10 years and the impact, it has to be separated into three phases. The first phase being that three years when you will see a speed increase and increase in cloud functionality and capability. What that speed will ultimately enable or be able to create is network ability to work with the cloud, ensuring that having storage on the cloud is the same as having the experience of storage on the device in the hard disk. That will not be only in smartphones but across products and will enable across connected products and lead to a whole host of possibilities.
Phase two, say 2021 to 2025, is very much about significance of cloud capability plus AI and 5G in combination and what they can create as a result. In terms of the device, that will mean an experience that’s way smarter and much more capable than what we have currently. So much better ability to understand and anticipate what you need, what your behavior is.
And the third phase, 2025 to 2030, is the kind of full unleashing of the Internet of Things. So each person will have their account. And then devices can all connect into that account through the cloud. So you have not only a smartphone device, but the entire ecosystem that can kind of learn from your behavior, from your actions, and therefore create a very customised inpidual connected internet experience.
Is 5G going to interrupt the concept of a global phone as you will have completely different network capabilities across different markets?
The goal is to have a 5G compatible product across countries and networks. In the next couple of years it will require customisation of product for the different bands and carriers, but our goal is to work towards that wider compatibility.
OnePlus has set the benchmark of a premium device that is also affordable, or more affordable than the other flagships. Is that becoming a difficult challenge now with customer expectations going up?
Our business model has been very much Internet-centric. Internet has been in our DNA from the beginning. We have been very much a B2C company from the start and globally oriented since the first day of OnePlus. So that is a unique business model in terms of both reach and the inherent costs of the business model versus other companies. With that as a prerequisite, an expectation is we make the best possible product and the best product experience possible. But because we have this unique business model, able to go direct to consumers, less of an approach on kind of what traditional companies would do, where they would have spent or where they would have channels it allows us to have cost savings that can be passed on to the end user.
As user demand for functionality increases it causes the cost of a device to increase. But that’s equal across the industry. So our business model advantage remains proportional.
From the start, OnePlus has been very much a company that’s been built around word of mouth and 60 or 70 per cent of people will find out about the company this way. It’s a very efficient model for business if executed well, based on a great product.
Design has been a very important part of OnePlus. How is it going to evolve for 2019?
Our product philosophy and our approach to product is creating an experience that is burdenless and this will not change. In terms of creating the fastest mobile experience that particularly smooth, we will have even more of a focus on resources, time spent on creating what’s unprecedented in terms of smoothness of device experience.
We still have a lot of pain points that have not been solved in many years like battery and durability of devices. How do you think you will be able to tackle that with the next series of devices?
5G, from both hardware and software perspective, is significantly more complex than 4G. We have actually been working on 5G for almost three years and have made a lot of progress. So far it’s been smooth. There are still particular challenges with devices in the areas like battery and heats performance, but they are all being approached and worked out good.
I think by the end of the year many of the challenges we will be able to be overcome to a whole another level.
Looking at a 5G product we have expectations that the product experience will be as excellent or greater than the product experience of the 4G device. So you won’t have shortcomings that are inherent to the 4G device that are seen as acceptable because it’s new technology... the experience should still be overall excellent. In Q2 we will be launching a 5G device, so we’ll be able to have our community members experiencing it very quickly.
In case of the camera you had the notch, then we went to the teardrop, then we went to the hole in the display, now you have the pop up camera. So is that a good problem to have, that you have many options?
A final solution will be a camera underneath the screen that’s able to exist on the screen without disrupting the screen experience and still serve all the functionality of the front-facing camera. Before that technology has been fully matured we will see a lot of different expressions and different approaches in the marketplace.
For example, the notch is not a problem of an approach in looking at the whole bunch itself, but the question is when can it be small enough to be both functional and excellent, but also have the expectation for the kind of user experience people that want. The notch itself can take many forms and shapes if it integrates certain technologies… for example the small water drop notch can be a very nice approach.
Apple and Samsung have moved to FaceID. Is that something you want to do?
FaceID is not a problem in itself. The problem it that it requires such a significant notch to exists on the device and for the user having a full screen immersive experience is significantly important point. That’s something that should be considered when looking at this technology. For example, FaceID or FaceUnlock can be used for unlocking the device or for payment, but a screen fingerprint sensor can also do the same without impacting the overall design of the device.
Pete, the CEO needs to have the constant ability to stand in the shoes of Pete the consumer, and that will ultimately make him better as a CEO.
Do you want to do a foldable phone?
I'm not thinking about it for now because it hasn’t demonstrated significant additional value to the user. Affordability is also something we are not sure yet. We won’t for the sake of marketing take an approach to create a product.
You have an enviable position in the premium segment in India now. What have you done right?
What we did most correct is take an approach to a world class standard and product and also deliver that world class standard and products to India and not look at the Indian market and say okay, we should make a lower-end, cheaper product for this market specifically. So our persistence in delivering world-class standard globally, India included, worked. Then building a local team with localisation, local knowledge and independent ability to be empowered to make decisions has also worked.
Is this a difficult crown to hold?
It really needs to go back to the core of what we do and it’s product. Really taking an approach that gets product right, that’s where our focus and efforts need to be. To be number one in the premium segment is a result of many things.
I am confident that if we continue to do product well we will continue to create a best in class experience. We will be able to convey and make aware to a wider audience and we will continue to build on what we already have created in India. If we look at last year for example, OnePlus' growth and impact on the premium market has actually created growth in the premium market as a whole. Without OnePlus, the actual size of it would have shrunk.
Is there a constant fight between Pete Lau the CEO and Pete Lau the customer? Is there something that you would like to add as a customer, but the CEO in you doesn't want to put it in?
It looks like it should be a constant conflict... yeah, a constant conflict in that what the CEO perspective is to make the business successful, and the consumer must be focused on what’s best for the consumer. But actually, Pete, the CEO needs to have the constant ability to stand in the shoes of Pete the consumer, and that will ultimately make him better as a CEO.
After five years, what we’ve learned is that what’s demanded by the users and what’s best for the users is a unique opportunity for us to deliver the best possible product. So we have this unique ability to work hand-in-hand with them. Then approaching product pricing in a way that creates a sustainable business rather than always trying to be limited by pricing like creating a certain pricing segment that you go after and then limiting yourself and putting profits very thin it’s not sustainable. It’s about first creating the best possible product and then pricing that creates a sustainable business model.
One great example is the Midnight Black finish on the OnePlus 6 devices. The finish itself costs an additional good few dollars and that is a significant cost. It is tough to create that finish. It sounds cheap as an inpidual cost per device, but if you multiply that over scale, it could be $20 million or $30 million, right? A business owner might then quickly come to the decision that this is not worth the value of $30 million, that could ultimately be attributed to say the bottom line. But conversely, Pete's perspective, with his confidence and insight in both the user and product, is to look at if it is differentiating in-hand feel.
And this differentiating design factor is striking in a way that will impact the user over the long term and allow them to recommend or to be able to see the device in a different light. So it’s easy to have that kind of temptation in the short term, but in the long term, making the right decision can have a wider impact.
What do you have to say about the next OnePlus flagship?
You will have an unprecedented experience, particularly on the smoothness front. I’m excited and I anticipate that when you get the product in hand you will feel this and you will be surprised. It will be very hard to go back to other products afterward.