How to Learn From a Phone Company's Mistakes

By Mike Elgan Print this article Print
Smartphone mistakes

Forget about learning business lessons from Apple. It's time to take lessons from a smartphone company with a history of errors, blunders and bad decisions.

Everybody likes to hold Apple up as an example of how to succeed in business. After all, it's the most successful company currently in existence, with a market capitalization (in the second quarter of this year) more than twice as high as the world's second most-valuable company: Microsoft.

Good examples are instructive. But so are bad examples.

In this column, I'd like to explore what business lessons can be gleaned from a smartphone company with a history of errors, blunders and missteps. I'm talking about the Chinese company OnePlus.

From the beginning, OnePlus gained a reputation for making high-end or mid-range phones at budget-phone prices. Its initial OnePlus One phone was spec'd like a $500 phone, but priced at just under $300.

That's a great way to win attention, loyalty, affinity and customers. Sadly, the company consistently squandered that reputation with a series of bad decisions.

OnePlus was in the news last week because it had to apologize for mistakes with the launch of its latest smartphone, the OnePlus 2, which caused phone shipments to be delayed by weeks. In the same apology, the company also admitted that it "messed up the launch of the OnePlus One as well" and that the delays "caused huge reputational damage to our company."

The errors, apology and damage to reputation are just the latest chapter in a long string of OnePlus blunders. As a heuristic exercise, let's review the infamous but instructive history of this company, with an emphasis on what other companies can learn.

1. Don't mislead the public about your founding.

There's no delicate way to write this, so I'm just going to write it: OnePlus fabricated its creation myth.

The company was founded in December of 2013, launched by two executives who claim to have defected from the Chinese smartphone company OPPO. One defector was the former OPPO vice president, Pete Lau, and the other was the OPPO marketing chief, Carl Pei. When Lau announced the founding of OnePlus, he started with: "Today is my last day at OPPO."

Cool, right? A couple of young guys with American first names and Chinese last names rebel against the status quo in China by striking out on their own to create a new kind of company and a new kind of phone.

The problem is that OnePlus is a subsidiary of OPPO. OnePlus is OPPO. The creation myth is smoke and mirrors.

When the OnePlus Website went online, the domain was registered to OPPO Electronic. Documents published by a smartphone blog showed that all OnePlus stock is owned by OPPO. OnePlus management says that OPPO, the phone company, and OnePlus have the same investors, an investment group called ... OPPO! Again, smoke and mirrors.

Rather than being an innovative startup, OnePlus, it appears, is a marketing gimmick hatched by OPPO to sell OPPO smartphones. The fact remains: OPPO owns OnePlus. So who owns OPPO?

OPPO is a brand of the Chinese electronics giant BBK Electronics, which sells products mainly in Russia, but also in the United States. In America, BBK products are sold under the Memorex and Philco brands.

So, rather than being an innovative, rebellious startup, OnePlus is the result of a plan hatched by a brand that's owned by a Chinese electronics manufacturer.

2. Don't promise innovations that you can't deliver.

After Motorola launched the Moto X phone (Motorola was then owned by Google, which later sold it to China's Lenovo), alternative smartphone backplate materials became fashionable. The Moto X offered various wood-backed phone options.

One of OnePlus' bold innovations was to go far beyond plastic and glass—and even beyond Google's wood-backed phones—to offer denim, Kevlar, bamboo, silk and sandstone black so-called "StyleSwap" covers. These exotic materials were a huge part of OnePlus' initial differentiation and created excitement among its growing fan base.

Unfortunately company promised features it couldn't deliver. When OnePlus tried to produce phones with such backplates at scale, it learned why nobody else ever tried it: It doesn't work and doesn't scale. Backplates had problems: They didn't fit, didn't hold together and turned out to be a bad idea.

The fact that OnePlus didn't know such backplate materials weren't possible or practical made naive and irresponsible. And fans paid the price.

This article was originally published on 2015-09-28

Mike Elgan, a Baseline contributor, is a Silicon Valley-based columnist, writer, speaker and blogger. http://elgan.com/

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