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China's OnePlus targets flagship phones from big players

Michael Kan | Jan. 8, 2015
Carl Pei is only 25 and his one-year-old startup has set out to figuratively kill the other leading smartphones in the market.

Carl Pei is only 25 and his one-year-old startup has set out to figuratively kill the other leading smartphones in the market.

It's certainly an ambitious goal for a Chinese company few may have heard of. But last year, his company OnePlus came out with a phone marketed as the "Flagship Killer" that went off and became an underground hit — not just in China, but also in the U.S, where the demand has outstripped the supply.

"We basically weren't prepared for what happened," said Pei, who is a co-founder of OnePlus. "We thought that all our demand would be in China the first year."

The company has only sold close to 1 million units of its first flagship phone, a drop in the bucket compared to the tens of millions Apple and Samsung sell annually. But OnePlus is one among Chinese smartphone makers who are rising fast, and could end up luring customers in the U.S. with the promise of cutting-edge devices at prices that undercut the competition.

That's already happened in China, now the world's biggest market for smartphones. Apple and Samsung still remain popular brands, but Chinese companies such as Lenovo and Xiaomi have risen to become leading vendors in the country, by selling feature-packed Android handsets that come at low prices. Scores of other Chinese companies, such as Huawei, ZTE and Yulong, the maker of the Coolpad, are doing the same.

OnePlus has taken a similar approach. Its flagship phone, the OnePlus One, has generated a lot of international buzz because the product is such a good deal. Starting at a no-contract price of US$299, the 5.5-inch phone offers cutting-edge specs, for essentially less than half the cost of what a Samsung Galaxy S5 or iPhone 6 goes for when bought without carrier subsidies.

Pei compares the company, which has 600 employees, to a Silicon Valley software startup that's focused on offering a free product. "Once you have a user base, then you can monetize," he said on Tuesday, while attending the International CES show in Las Vegas.

Launched back in April, the OnePlus One isn't exactly free, but it's priced just above the cost it took to make it. The Android phone features a 1080p screen, a Qualcomm Snapdragon 801 processor, 3GB of RAM, and a 13-megapixel camera in the rear, among a whole host of features one would only expect in a high-end device.

Consumer response to the phone caught the Chinese company off guard. Originally, OnePlus estimated that product sales might reach between 30,000 and 50,000 units. By November, however, the company had sold half a million, or about "ten times more," Pei added.


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