OnePlus surprised consumers when it introduced the OnePlus One, a smartphone with flagship hardware that’s priced at half the cost its competitors charge for similar devices. It sounds too good to be true, but so far reviews are relatively positive. The only red flag that we’re still wary of is an instance where, after winning a contest, one contestant received what was supposed to be a brand new OnePlus One, only to find an empty box. So how is OnePlus able to sell a device for so cheap?
Easy. It’s not making any money off of it.
In an interview with Tech Radar recently, OnePlus CEO Peter Lau explained that the company is selling the OnePlus One at cost. In other words, it’s selling it for the same price it costs the company to build it. That’s a business model that doesn’t typically work, though it does for some companies. Amazon, for example, sells the Kindle Fire at cost but makes a profit the second you start buying media on it.
“We are selling the phone at cost,” Lau said explicitly. “We are able to do that by redistributing our costs to better benefit the user. Rather than put money towards a large marketing budget, we are focusing on online marketing and community interaction. Rather than working with retail partners, we rely on selling the device online.”
That still doesn’t explain how Lau and his company plan to turn a profit from the OnePlus One, it just explains where the company is saving additional costs. It seems the goal is to get the brand name out there right now, so that perhaps the company can sell more profitable devices in the future.