It is a dilemma thousands of young Indians have been wrestling with in recent years. Apple or Samsung? And if that wasn’t a tough enough choice, now there’s a not-so-new kid on the block that’s also teasing mobile users in the world’s fastest-growing smartphone market: Shenzen-based smartphone company OnePlus. Pete Lau, founder and CEO of OnePlus, offers a few pointers to help make a decision: The 44-year-old says since you’re going to use your phone every day, the overall experience should be light, fast, and the device should feel just right in your hand.

It might sound like marketing spiel, but Lau knows his product and his customer. The self confessed perfectionist’s conception of the smart - phone experience has helped OnePlus steal a march over bigger rivals such as U.S. giant Apple and South Korea’s Samsung to lead the Indian premium phone market. We meet Lau during his recent visit to India and ask him about the company’s journey and its future plans. Clad in a white T-shirt, black trousers and jacket, and his signature white Christian Louboutin sneakers, he looks every bit a new-age tycoon, but without the hyper energy. Calm and collected, he explains through an interpreter that since he also looks at himself as the company’s chief product officer, all phones must pass his scrutiny. It is better to wait and perfect some - thing than have a half-baked product, he says. And he’s done that numerous times—from rejecting the design of the phone because it didn’t ‘feel’ right in his hand, to holding back a feature because it didn’t meet his standards.

It’s certainly been worth playing the waiting game in India. According to analytics firm Counterpoint Research, OnePlus has pipped Samsung and Apple in 2018 in terms of sales of premium smartphones, which are priced above ₹30,000. While it didn’t provide sales figures, the Chinese smartphone accounts for the largest chunk of the 4.5-5 million premium hand - sets sold annually in India. Also, OnePlus had a 36% share of the premium handset market in the fourth quarter of 2018. Premium phones account for a little over 3% of the overall around 150 million smartphones sold in India. “No. 1 in the premium segment is actually a result,” Lau tells Fortune India over kebabs and naan at Delhi’s iconic Bukhara restaurant. The focus, he says, is to enable the Indian community to have a “premium overall experience”. Going by the rock-star treatment Lau got from the restaurant staff (“You make fabulous phones,” one said), Indians love OnePlus (“You make fabulous phones,” one said), Indians love OnePlus.

OnePlus store in Delhi.
OnePlus store in Delhi.
Image : Narendra Bisht

If the real estate market depends on location, location, location, the mobile phone market in India is all about pricing, pricing, pricing. And that’s where OnePlus has scored big in India: It has positioned itself in the premium segment but at a maximum price of ₹50,000, which is way below the starting price of ₹75,000 and above you’d shell out for an iPhone or a Samsung flagship. “A ₹30K-40K phone with great features is also aspirational for a large section of Indian consumers,” says Pinakiranjan Mishra, partner and leader, consumer products and retail, EY. “The biggest lesson it [the India market] can offer is that you can’t take anything for granted—it’s about offering great value and a great product at a price which is palatable.”

OnePlus India general manager Vikas Agarwal, 38, says India is its biggest market. The company also sells the phone in China, North America, and Europe. So, when demand peaks during Diwali, the company ensures there’s adequate stock, even at the cost of other regions. Lau says OnePlus looks at India as its second headquarters. Indian users make up over 30% of the community globally. That’s a long way for a company that never thought about coming to India when it unveiled the OnePlus One in North America and Europe in early 2014.

Initially, the phone was available by invite only and getting an invite was akin to winning a lottery. But then the company noticed that of the limited handsets on offer, a significant chunk of some 5,000-6,000 were picked up by Indians in the U.S. for themselves or friends and relatives back home, says Lau. And these users “immediately started asking us, ‘When are you coming to India?’” OnePlus launched in India in late 2014, with Agarwal as the first employee. And within weeks, it faced its first major challenge: a court order restraining the sale and shipment of the OnePlus One to India because it used U.S.-based software developer Cyanogen’s version of Android. Cyanogen had an exclusive pact with Micromax for its yetto-be-launched Yureka phones. OnePlus took a stumble after Micromax went to court but bounced back with Oxygen OS, its version of Android. There were more setbacks in store. In October 2015, it came out with the OnePlus X priced at ₹16,999, its attempt at an affordable smartphone. While people loved its design, few were buying it. At a community meet-up in India later that year, customers told Lau they expected OnePlus to deliver only top-of-the-line or flagship phones, not budget ones. Lau listened, and OnePlus has been on a roll since.

India was a market ripe for the picking. Counterpoint Research associate director Tarun Pathak explains that two-three years ago, there was a “perfect gap in the market in the premium segment”: Android flagships were either priced above ₹50,000 and the iPhones launched in India then “were expensive compared to the rest of the world because of import duties”. For example, the iPhone 7 launched at ₹60,000 in 2016, while the top model of the 2018 iPhone XS Max set one back by nearly ₹1.5 lakh. OnePlus brought all top-of-the-line features to its phones, but at a more affordable sub- ₹40,000 price. So, people buying phones in the ₹20,000- 30,000 range started upgrading to this segment. Suddenly, OnePlus became the “in thing”. Even die-hard Apple loyalists switched allegiance. “If they [Indians] can justify the price, they do not mind spending the money to get the best possible experience,” Agarwal says. Amazon India, OnePlus’ exclusive partner, says OnePlus products are among the highest-rated on “They command massive customer loyalty as one out of three OnePlus customers upgrade to a new OnePlus smartphone on,” says Amit Agarwal, country head, Amazon India.

Vikas Agarwal, general manager, OnePlus India.
Vikas Agarwal, general manager, OnePlus India.
Image : OnePlus
The underlying product philosophy for us is what we call the burdenless experience; which means that every time we talk about using the smartphone, you should not get burdened by technology
Vikas Agarwal, general manager, OnePlus India.

Nipun Marya, director of brand strategy at Vivo India, which competes with OnePlus in this segment, agrees that consumer experience plays a big role, from “buying the device, after-sales service, loyalty programmes and the entire purchase cycle”.

In the past 12-18 months, a lot of people buying older iPhones have shifted to the new OnePlus, Pathak says. While he doesn’t have a figure, Lau claims that “over 20% of the new OnePlus users have come over from Apple products”. That could be very true if one goes by Apple’s performance in China where local manufacturers such as Huawei, Oppo, and Vivo have edged past the U.S. giant.

In India, the premium segment numbers reveal the impact of the OnePlus. Pathak says the segment had been expanding in double digits, but for a fall in growth last year when it grew only 3% because of a plunge in Apple’s sales. “[But] if you take OnePlus out of the equation, the category would have actually declined by 13%,” he says. And in 2017, the category grew by 43%, but without OnePlus, the growth was only 16%.

Pricing has definitely been key to the success of the OnePlus in India. But there are other factors. The simplicity of its technology is a big draw both with India’s millennials and the not-so-tech-savvy middle-aged Indians. The lag-free, simple interface of its phones, which run a long time on a single charge, seem to be big draws. Lau says for OnePlus, its approach is to make “the best possible flagship product”. “Every detail, no matter how small, matters at OnePlus,” adds co-founder Carl Pei, 29. “The underlying product philosophy for us is what we call the burdenless experience; which means that every time we talk about using the smartphone, you should not get burdened by technology,” Agarwal explains.

Unlike their peers Oppo, vivo, and Huawei, OnePlus and Xiaomi had Indians as the face of the company in the country, so customers started associating with the brand, Pathak explains. Lau agrees, saying they built a local team and empowered them to take decisions for the region. In fact, Pathak says some respondents to their surveys don’t know that OnePlus is a Chinese brand. Agarwal says India was the first market where the company built a local team. “And today we have 15 offices in different regions worldwide. Each of these offices is built based on the learnings in the Indian market, which is at a much more advanced stage of development.” Lau says unlike other companies, they didn’t offer multiple devices at various price points in India, but instead focussed on a single model for the country. It persisted in delivering a world-class product at a single price point, despite India’s diversity, Lau says.

Experts believe the OnePlus strategy in India could serve as a blueprint for other regions. OnePlus should do well to apply the India playbook to other regions, says Counterpoint’s Pathak. “The feedback you get on your products is very distinctive because users [in India] are very aware of what they are buying,” he says. “Any brand which can carve a space so quickly in the premium end of the market in a highly value-conscious market like India [where 80%- plus of the smartphone market is still below $200 and 45%-plus of the mobile phone market is still feature phones], can definitely use all these experiences to replicate anywhere else in the world,” says Navkendar Singh, research director at IDC India, which tracks the sector.

Pathak says India—where one-third of its total users reside—is critical to OnePlus and it has little margin for error as the company launches only one or two models a year. IDC’s Singh adds that the company’s success in India will define its “long-term ambitions and fortunes globally, considering the huge potential India presents and also India being the only market of its size to be growing in double digits”. Now, OnePlus is looking to increase its market share in the U.S.—Apple’s home turf. Till recent times, OnePlus had not been available through network operators, the popular means of procuring a phone in the U.S. Now, T-Mobile is offering the OnePlus 6T. “T-Mobile and OnePlus customers had repeatedly asked us to partner—even tweeting at T-Mobile’s CEO, John Legere, directly! So, we do what we always do: listen and deliver,” says a T-Mobile spokesperson.

But what does the user, the person at the centre of OnePlus’ efforts to deliver a “burdenless” experience, have to say? Romit Dasgupta, a Bengaluru-based senior analyst with a multinational, is sticking to his OnePlus 5. “It’s been two years and there’s been no degradation in performance,” he says. “Because of the developer community, even though OnePlus One is not receiving updates anymore, I now have Android Nougat on my OnePlus One and I’m still using it,” says Karan Gupta, a video developer, who picked up his phone in the U.S. before it launched in India.

While its online play lets OnePlus reach a wider crowd, Agarwal says there’s a need for offline stores for those who are not comfortable shopping online, or want to see the device first before buying it online. Before its offline play, OnePlus used to organise pop-up events. Seeing the good response, OnePlus decided to open experience stores. Another decision is OnePlus’ promise to return phones in an hour at service centres, where there’s free coffee and Wi-Fi for customers.

That India figures high in OnePlus’ plan is evident from the fact its Hyderabad R&D centre will be its biggest in the next three years, with 1,000 engineers on its rolls. “India is such a great, large and diverse market. It’s a great place for manufacturing. So, a combination of Make in India and R&D in India makes for an interesting and holistic approach in the future,” says Lau. While the performance and pricing of its products might have endeared OnePlus to Indians, there are challenges ahead. Pathak says the biggest one is to scale in offline while maintaining its premium play. Another challenge for any manufacturer in the premium segment is the non-seasonal cycle. How do you sell a OnePlus 6T in March or April when your new devices are just a few months away, he asks. “A major challenge is obsolescence,” says Lau. “If you sell a few units less you will not die, but if you have too much inventory and you cannot move it, then you can die.”

While it doesn’t plan to start services such as streaming and the like soon, Pathak says OnePlus will eventually have to do so. For the moment, it is looking at 5G and how it will revolutionise the phone experience.

This story was originally published in the May, 2019 issue of the magazine.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.