OnePlus co-founder, Carl Pei, recently sat down with PC Magazine to discuss the rollercoaster year the company had, and how it manages the supply chain to meet demand. Without the resources of an Apple or Samsung, the company can’t take the same risks as the big boys, which is why consumers can’t just buy units all willy-nilly. Instead, OnePlus has relied on an invite system, along with occasional pre-order events.
At just $299 for the 16GB model and $349 for the 64GB model, OnePlus makes only a sliver of profit from each phone sold, which means the company only orders the components it can sell. That might not be an approach favored by consumers, but it means the company is able to plan for the future, like if people suddenly stop buying its devices.
“Sooner or later, it’s going to stop, and we don’t want to be caught with too much inventory,” Pei explained. “With no margins, we can’t have a situation where we have too many units and we’ll have to discount them.”
Take Amazon, for example, which took a huge hit on unsold Fire Phone inventory. Samsung has also seen a decline because of the sheer number of devices it churns out each year. OnePlus wants to avoid these situations, and instead be smarter about how it does business. The company’s OnePlus One is an amazing phone, and it would be a darn shame if the company went under because of a poorly run business.
The good news is that the company’s outlook is positive. Pei originally planned to ship 30,000 phones in 2014, but OnePlus has already surpassed the half a million mark. Pei hopes to break the one million mark before the year is up, but only if the company can make enough units. It’s worth noting that in the case of OnePlus One, “shipments” do equate to sales, because OnePlus only ships units out once they’ve been purchased by a customer. We often hear about OEMs shipping millions of units worldwide, which doesn’t necessarily mean the devices are being sold to consumers.
As a startup, Pei seems to have a pretty solid handle on how to run his business. There have been some mishaps along the way, and the invite system is still a major thorn in the company’s side. But the OnePlus One is an awesome device that’s well worth the hassle. At $299, I’d say it’s probably the best value all year. At least until the OnePlus Two comes out next year, which Pei said will likely be announced in either Q2 or Q3 or next year.