The Downfall of OnePlus!

[00:00:00]This year so far has been the worst year for the smartphone industry.

[00:00:04]>> We have seen memory chip prices go through the roof. Apple and Microsoft each announced price hikes for some of their popular >> the price of memory and storage. Those have quadrupled over the past year and they're they're going to keep going up.

[00:00:15]>> And the most interesting case study is OnePlus. Like let me tell you the chronology. Just a couple of months ago came a news article which was sort of a hit piece. OnePlus is slowly being dismantled. The article said OnePlus is completely going away. It looked like the article was written by AI. OnePlus also denied the claims. But later on, OnePlus India CEO was called back to China. And then this week, there came an announcement. OnePlus is shutting down its operation in North America and Europe. Moreover, Oxygen OS is now dead.

[00:00:43]All OnePlus and Realme phones will get color OS from the next update. Moreover, moreover, Realme is also leaving China a lot of other countries and will only focus on Nordic regions in Europe where there is growth. And the saddest news of all, Bloomberg publishes another report which says all of what happened 2 days ago that is going to happen. Plus, OnePlus in 2027 will only be China exclusive. It will [music] leave India and whatever countries it is in again.

[00:01:09]OnePlus has denied the claim, but I have heard from my sources the article is bang on. It's true. It's happening. And leave OnePlus aside. Slowly, IU is also being absorbed into Vivo. Top IU management has slowly started leaving.

[00:01:22]Now there's a brilliant video by Tech Alter calling why enthusiast brands betray [music] you. In that video he explains why enthusiast brand eventually leave their core audience to go to mass market and a lot of them in this pursuit just [music] fail. But today I want to talk about something very different something no one has said on tech YouTube before and something that in my opinion goes far beyond smartphones because [music] I don't think OnePlus is about the story. In fact, OnePlus is the symptom, a symptom of something much bigger that's happening to the entire smartphone industry. And once you understand it, you will not see Indian smartphones like before. My name is Pratik. You're watching TWW Explain. And here's the curious case of enthusiast brands.

[00:02:01]Now, this is this is the graph that I made which sums up the Indian smartphone market. This is the industry cycle. We are actually here. And why are we here?

[00:02:11]Well, for that we need to go back to 2014, 2015 to understand all of this.

[00:02:15]Most of us back then were thinking of buying a smartphone. In the under 20,000 price range, we had the Moto G, Xiaomi Mi3, Redmi 2. Those were fantastic smartphones on budget. Then OnePlus 1 launched on an invite basis and it stormed the Indian smartphone market.

[00:02:29]Then there was Galaxy X, the HTC1 M9 and honestly it was a very very good time for us enthusiasts. These were our first camera, gaming console, a personal screen to watch YouTube videos.

[00:02:41]Basically, it was our first everything.

[00:02:43][music] Then came 2016 and this happened.

[00:02:46]>> Jio's data, voice, video, and the full bouquet of Jio's application and content will be available for everyone absolutely free till 31st December 2016.

[00:03:00]The fast internet was free and it created a massive demand for 4G smartphones in India. From tier 1 to some in tier three, everyone wanted a smartphone to consume this free data to watch YouTube videos, to make video calls on WhatsApp, talk to their loved ones on the phone for hours. People in tier 1 were booking cabs on Ola, ordering things from Flipkart and Amazon. And because of this, smartphone makers didn't have to convince you to buy a phone. You already wanted a smartphone because the GeoFree 4G launch in turn created a huge demand for smartphones. [music] The demand was so huge that the Indian smartphone market saw a huge year-on-year growth. And now if I put this year-on-year growth data till 2026, the smartphone growth of 2016 is still the highest in terms of percentage. In that 2016 smartphone boom, newer smartphone makers enjoyed a lot of growth. These Chinese smartphone makers made the entry barrier to get a good smartphone so so low. And when the opportunity is big, everybody wants a bigger piece of it. Now we have entered this growth phase. See amidst all this boom there was one company who understood the game. Any guesses? It was the BBK electronics. I think they understood something about Indian consumers before everyone [music] else did. Think about it. If BBK had only one smartphone brand, every customer they lost, they would have gone to other competitors like Samsung, Honor, Motorola, etc. But what if [music] they create five smartphone brands? Something interesting would happen. A smartphone buyer is now confused between Oppo, Vivo or a OnePlus phone. And at the end of the day, even though they are competing against each other, the chances are high that you will end up buying a phone from the same company. And at the end, they win because they're not trying to make one brand bigger. They're making sure no matter what kind of smartphone buyer comes in the market, they end up buying a BBK branded phone. And this strategy, it is not unique to smartphones. It's a common business practice. If you take PepsiCo for example, when you walk into a supermarket, you'll see these brand products. And to us, they all look different brands. Like all of them have different logos, different packaging, different advertisements, but behind all of them, PepsiCo. And here's the beautiful part. These brands don't have to beat every competitor. They just have to make sure that one of their brand wins. And now I know what you're thinking, Pratik. Why are you telling us all of this? What's the point? See, one brand [music] can't be premium and budget or make everyone happy because someone walking into a store wanting a 7Up is not looking to buy a Gatorade or Sting energy drink. Like one is soft drink and one is energy drink. Different consumers have different needs. So instead of forcing one brand to appeal to everyone, bigger [music] companies build multiple subbrands or sister companies with its own identity, own audience and together they cover a much larger market. And this subbrand strategy works beautifully when the market is in a growth phase. Even other brands copied this strategy like Xiaomi made Poco, Redmi became an independent brand. In fact, recently nothing also made a subbrand CMF. Subbrand strategy works brilliantly when the market is in a growth phase. But here's the thing, markets don't keep getting bigger forever. Eventually, they slow down.

[00:05:51]This is where the Indian market is right now. The replacement phase. So, what happens is once the rule of the games changes, now it's no longer about finding new consumers. It's about making sure that the existing consumer doesn't leave. So, back in 2016, most of the smartphone companies, they were competing for people to buy their first smartphone. Every new user entering the market means that the market is growing.

[00:06:13]But today, 50% of the Indian population has a smartphone. Leave aside rest 10 to 20% those are kids or really old people which leaves us with remaining 30 to 40 cr people those people will buy a feature phone or just entry-level phone like BI plus so now the mass market you me or parents cousin we all own a smartphone we are not buying our first smartphone we are just replacing our old one see maybe your first phone was a Xiaomi then you moved to OnePlus then maybe Samsung and now an iPhone we didn't become four different consumers we were always one consumer we just [music] kept switching brands. So in this replacement phase, the subbrand strategy doesn't work. See, if the entire group has 100 users or IQ user buys OnePlus, OPPO user goes to Vivo, [music] there's still 100 users only, the revenue more or less stays the same. And that's a problem because now you're spending money on maintaining, marketing, doing R&D for five different brands, but the [music] user base still remains the same. And retaining a user also costs a lot of money. For example, if I want to buy the OPPO Findex 9, which one of my favorite phones in 2026, but I don't have 60 to 70,000 to buy a premium OPPO phone. So, there has to be good offers on credit cards, EMI. In fact, if you want to exchange an old phone, Oppo gives us crazy discount all in hope that we buy its premium phone and not leave to the other brand. And this credit card offers, no cost, EMI, exchange bonus, all of this, the brand also has to give a percentage from its own pocket to get these offers. And also if you look at the data the smartphone market numbers for this and last year all these brands are losing customer share selling lesser phones. Now you might ask if we are in the replacement phase what's next? Well this the consolidation phase. Even though different brands in different industries during this phase say subchangi the game keeps changing the rules change [music] and in reality they are not fine and we start seeing brands disappearing not because they made bad phones [music] but the subbrand strategy is no longer working and a major reason is also the AI boom is happening. Even [music] AI has a lot of new brands now. So due to the AI demand, the cost of making a smartphone has risen by 300% compared to last year. Like we spoke to nothing co-founder Akis in this [music] podcast who broke down the cost of making a smartphone and how difficult it is in 2026 [music] to make a budget phone. And fast forward to now CMF will not launch a phone this year. It's also a budget brand. IOU might be absorbed in Vivo and Poco is already gone under Xiaomi.

[00:08:32]Realme might or might not focus on India next [music] and who knows they might leave. and 2027 again it might be the last year for OnePlus as well. So the brands that took a multibrand approach they are now optimizing hard on operating system Android skins they're starting to become one the teams are merging the service centers are merging resources are getting shared and behind the scenes companies have started to function like one single big company even if on the outside it looks like different brands and then comes the final chapter the decline phase now I'm not saying smartphones will stop selling or they'll die but what happens in this phase is there will be fewer fewer smartphone brands they will charge premium for a single phone like gone are the days when you will get a 5G phone in 10,000 not happening everyone will have to pay more money to get the same phone which if you look at this is what we are seeing in the Indian telecom industry as well Jio and I are only two major players they keep hiking prices and you cannot do anything about it you have to pay because data recharge is a necessity now sure there will be newer smartphone brands coming like there's nothing is entering 4G phones you see it's a big market new players will always come and they will always take a shot but what's happening is see growth creates more brands. Maturity decides which brand stays in the game. So in this decline phase, the number of brands will and will only decline and you will have fewer options. Let's talk about OnePlus.

[00:09:53]A lot has happened with them in 226 and we have covered it in this video. See over the past week there have been a bunch of announcement. OnePlus is shutting down operations in North America and Europe. Next oxygen OS is going away. It's not coming back. The reason people bought and still buy a OnePlus phone is Oxygen OS. But now the old and the new phones would now run on Color OS with upcoming updates. But the next question is what about India? Now OnePlus officially has given a statement that they are not leaving India. They have in fact announced a new budget phone the OnePlus N6X.

[00:10:23]But as per our sources, OnePlus may be gone by the end of 2027. They would wind up their operations from India as well and will only stay exclusive to China. So yeah, [music] that leaves us with two questions. First, what about the people who are owning OnePlus phone? What will happen with your phones? Well, for the phones that still have their software update cycle remaining, see, you're one update away from being an OnePlus phone to converting to Oppo phone. Now, the people concerned about, oh, color OS on the OnePlus phone. Well, here is the OnePlus 13 and Oppo FindX 9 Pro. See the quick settings, notification panel, flux home feature, setting page, [music] everything is the same. The writing was there on the wall and credit were due.

[00:11:05]Color OS has improved leaps and bound.

[00:11:07]It's a good OS. I'm not criticizing it.

[00:11:09]So update wise, you would be sorted.

[00:11:11]There would not be any issue. But what about repair-wise or damage? What if you damage your OnePlus phone? Well, OnePlus has already merged their customer care services with Oppo. So if your phone has some issues, you have to go to the nearest OPPO service center and you're good to go. So basically the existing OnePlus users are covered under the OPPO infrastructure. But what about the newer ones? Should you buy a OnePlus phone?

[00:11:31][music] Well, you should buy whatever phone is good for your budget. If you happen to get a OnePlus phone, you would still come under the Oppo infrastructure. And at last, I would like to say something important. [music] If you're looking for a value for money smartphone, sadly that time is gone now. The markets have shifted towards premiumization. You will have to pay more. Sad. See, everyone is telling you there is a price hike. There is a price hike. But I'm telling you the price hike is there to stay. All I can say is India brace for premium. Yeah. And my first phone that I bought from my salary was a OnePlus phone. So I hope they come back later on. Yeah. I just hope that all of these news is not true and they still continue do really good. But yeah, on that note, this place signing off. See you in the next video and no pew pew this time.