The Plight of the Chinese Flagship KillersIn the last few years, we’ve seen a significant disruption in the smartphone market. With brands like OnePlus and Xiaomi, we’ve seen phones that perform just as well as flagships from trusted brands like Samsung, Apple and Sony but at a much lower cost.
In the last few years, we’ve seen a significant disruption in the smartphone market. With brands like OnePlus and Xiaomi, we’ve seen phones that perform just as well as flagships from trusted brands like Samsung, Apple and Sony but at a much lower cost. These companies have shown us that there is an option where you could purchase a product with top-of-the line specifications without the hefty price tag that we’ve all been accustomed to. As users, we’ve also accepted these companies and have invested in the products that they manufacture and for the most part, we’ve been happy with their offerings. Both of these companies, OnePlus and Xiaomi, have authorised distributors in Nepal now and, for the most part, they have been working quite well: they have favourable sales figures and through their massive online following, they have dedicated consumer bases as well.
But what did OnePlus have to give up to make all of this possible? OnePlus brands themselves as ‘Flagship Killers’; meaning that they provide phones with flagship grade hardware without a cost that would burn through your wallet. From the outside, it seems like a very good strategy to follow but on the inside, the company has had to wade through treacherous waters to support their ‘flagship killer’ products. For a phone to be priced so low, corners have to be cut and although these shortcomings are invisible to us, they exist within the inner workings of the company and it’s up to us to ensure that they survive.
Apart from aspects like lower inventory management and on-demand production lines that helped the Chinese company cut costs, they skimped on wide-scale marketing and advertising campaigns as well. To counter their insufficient marketing push, OnePlus decided to market their products to the enthusiast crowd, a small sub-set of the market that would act as opinion-leaders to the bigger mass-market. This type of marketing, also called Evangelism Marketing, depends heavily on the quality of their products because of the enthusiast opinion-leaders approach a product with high-expectations and has been used by a lot of smaller companies, or independent companies, like Cyanogen and Pebble; but how do the ‘flagship killers’ match up?
Pebble, makers of the first commercial smartwatch, made products that appealed to an enthusiast market with their focus on geeky and quirky user-interfaces on their smartphones that appealed to a lot of the techie crowd. In a similar vein, Cyanogen, a software company that made the popular CyanogenMod custom Android ROM, was a completely an enthusiast product since most of the regular smartphone users could care less about rooting and flashing third-party custom ROMs. And while this kind of marketing might be a good option for new comers in the market, it does not bode well for the overall sustainability of such companies. Today, Cyanogen Inc. has laid off a huge portion of their workforce and has stopped working on nightly builds of their CyanogenMod ROMs, a move that has isolated their loyal group of enthusiast users. Pebble was also recently acquired by Fitbit and recently, even Fitbit has been struggling financially as seen with their recent massive employee layover.
Looking at all of these independent companies fold after catering to a distinctively enthusiast set of consumers, it raises further questions for the sustainability of companies like OnePlus and Xiaomi who’ve all come to accept and love.Just taking a look at Roger’s Bell Curve—also known as the technological adoption lifecycle—the first people to buy into a new innovative product are early adopters, mostly populated by enthusiasts. But sticking to the enthusiast crowd means segregating a large portion of a profitable market. According to Roger’s Bell Curve, after a product has been accepted by the early adopters, it moves on to a wider market made up of normal users that fall under the early majority and late majority users on the curve. But for companies like OnePlus, making this transition hasn’t been easy.
While OnePlus did try to appeal to a wider audience with their OnePlus 2 smartphone, it did not sit well with their loyal enthusiast supporters. The OnePlus lacked basic functionalities like NFC and Quick Charge, features that probably wouldn’t have made much difference to regular users but outraged enthusiasts who demand perfection from their products. Even Pebble and Cyanogen tried their hands at appealing to a wider audience: Pebble tried appealing to a more fashion conscious audience with their Time Round series of smartwatches and even a health nuts with their third-generation of Fitbit like health monitoring smartwatches. Cyanogen, in a similar fashion, tried expanding beyond their enthusiast consumer-based by partnering up with smartphone manufacturers like OnePlus and Micromax. But in the end, both of these companies ended up folding because they isolated their loyal fan-base by trying to appeal to a wider audience, a move that was detrimental to both of the companies.
Striking this balance of retaining a loyal enthusiast customers while making a push to expand to bigger markets seems to be a very difficult for companies like OnePlus and Xiaomi who have already have a deeply-rooted consumer base in the enthusiast bracket.Oppo is one such company that started out by catering to distinctively enthusiast consumers but is, today, the fourth largest smartphone manufacturer in the world. Oppo achieved this by rebranding their phone for the mass-market leaving their loyal enthusiast consumers behind. Today, Oppo brands itself on the basis of its good selfie picture quality and by featuring big-name celebrities like Hrithik Roshan, Alia Bhatt and Sonam Kapoor in India. The story of Oppo’s survival is one of success and today, we’ve even seen the Chinese smartphone manufacturer penetrate the Nepali market as well.
But in such a crowded smartphone market, OnePlus and Xiaomi’s move to a bigger mass market might be detrimental to the overall working inside the company, as well as negatively-affect their brand value. Even today we hold a specific bias against Chinese companies and the reason we’ve only seen OnePlus phone in the hands of only a few of our friends is because of the fact that it does not have the same brand weight that many of the heavy-hitters like Samsung, LG, Sony and Apple have in the Nepali market. For OnePlus’ products to appeal to a wider audience, they need to brand themselves as a company that’s not only focused on the specifications but rather a company that works with the growing trends of the market. Because many regular users don’t care about the latest processors or the most recent standard in RAM technology, OnePlus is still stuck to their enthusiast consumers. While OnePlus has made attempts to market themselves to regular users, they’re using traditional means such as YouTube advertisements that fail at appealing to consumers who’ve been desensitised to such means of marketing.
It is imperative that companies like OnePlus and Xiaomi find a bigger consumer base for their overall survival but part of the problem is also linked to us, the consumers. We, as consumers, need to understand the unique space that companies like OnePlus and Xiaomi have occupied in the large smartphone market and unless we help these companies survive, they might not be around for much longer which would have a bigger ripple-effect on the entire smartphone industry as a whole. Today, these companies have shown as that with effective control over their production lines and marketing strategies, users can benefit with a low-cost high-performing smartphone but once these companies go the same route that Pebble and Cyanogendid, we might not even have this option anymore.
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