The OnePlus One smartphone could upend the apple cart for the entire smartphone industry. But that's only if the high-quality, low-cost handset becomes available in huge volumes. Until then, OnePlus and its millions of potential customers can only hope smartphone leaders Samsung (NASDAQOTH:SSNLF) and Apple (NASDAQ:AAPL) see the long-term threat this upstart poses, and change the way they do business.
So far, that hope is clearly in vain. OnePlus finally took the lid off its strict invite-only policy for a one-hour pre-order window on Oct. 27. The China-based company wanted a reasonable number of committed buyers while also vetting its order system for a bigger launch.
Unfortunately, the pre-order experiment only reminded us why OnePlus isn't ready to change the smartphone industry yet. The ordering system received far more traffic than OnePlus had expected, bringing the servers to their knees. Interested buyers who had prepped for this moment were unable to complete their orders, leaving untold numbers of potential customers thoroughly unsatisfied.
So the company apologized to its users, pledged to buy more Web and database servers to handle much larger traffic loads, and set the next pre-order date for Nov. 17. Only time will tell what OnePlus learned from its first pre-order mistake.
OnePlus is running out of time
Company co-founder Carl Pei recently told Forbes magazine that about 500,000 OnePlus One handsets have shipped so far, and that he is aiming for a full million units by the end of the year. These are downright piddling numbers next to Apple's 39 million iPhones sold in a single quarter, or Samsung's roughly 80 million units.
And things get worse when you consider that this million-smartphone target will end up close to the total lifetime sales for this handsome handset. The competition isn't standing still. Samsung and LG are undoubtedly gearing up for their next product refreshes in spring 2015, making the OnePlus One look a bit weaker by comparison.
In fact, the OnePlus One's main competition comes from devices launched in 2013. Other than a premium-feeling case and an outsized 3GB of RAM, The One matches feature sets blow-by-blow with 2013 classics like the Samsung Galaxy S4, iPhone 5s, or LG G2. The G3, iPhone 6, and Galaxy S5 sort of earn their premium prices by offering stronger hardware.
The Samsung Galaxy S5 flagship might cost a princely $610 without service plan discounts, but last year's Galaxy S4 has already dropped to $440. The step-ladder discounts will happen again when the Galaxy S6 hits the scene, probably pushing the Galaxy S4 down to more or less match the OnePlus One's bargain pricing in the low-to-mid $300 range.
And that's where the OnePlus One loses its big selling point. It'll be time to introduce a OnePlus Two or some such, matching the features of phones like the Galaxy S5 and iPhone 6, but priced to move at roughly $350 per unit.
To nobody's surprise, OnePlus makes almost no profit on the sales of its existing low-cost handset. Putting more price pressure on this upstart before it can handle even a modest shipping volume, well, it looks like a quick death sentence.
The grand OnePlus One experiment shows just how wide the moat is around today's smartphone leaders. It's almost impossible for a new company to make a mark in this industry, even if it comes equipped with a great design and a killer price point.
I sure hope we see a OnePlus Two next year, and that it is properly equipped to continue the good fight. But these first-generation struggles are telling, and the newcomer might not make it much further.
OnePlus is arguably fighting for its life, trying to strike the right balance between supply and demand. The server-crashing interest in the OnePlus One is a good sign, but the company could still drown in a sea of unsold handsets if it miscalculates the upcoming rise of reasonably priced and totally comparable smartphones, two generations removed from the cutting edge.
It's now or never, OnePlus. I hope you blow that modest million-unit target out of the water in 2014, because I want to see you around in 2015 and beyond. The smartphone market could use a constant reminder of the pricing-power concept.