Xiaomi and OnePlus: can going viral beat billion-dollar marketing budgets?

August 18, 2014

Hugo Barra Xiaomi -19

It’s not easy to go up against companies like Samsung and Apple in the smartphone market. Samsung spent $14 billion on marketing and ads last year. Apple has a prominent chain of retail stores and an unshakeable base of fiercely loyal fans. If companies like LG and Sony are finding it tough to wrest away market share, how are newcomers to the world stage like Xiaomi and OnePlus going to do it?

There’s no way they can go toe-to-toe on advertising spend, but there are alternative routes to success. Both companies have been aiming for an exclusive aura by limiting supply. They have also been patiently building a relationship with fans, showing a willingness to listen, and delivering what they want, although OnePlus has learned that it’s not easy to get social media competitions right.

Undercutting the competition

Before we get into the social media tactics, we can’t ignore one of the major drivers of potential success and that’s the price. Comparing specs on paper both Xiaomi and OnePlus are offering a lot more for your money than Samsung or Apple. These lower prices are partly based on the lack of traditional advertising.

oneplus one aa (9 of 34)

The OnePlus One sounds too good to be true, $300 for a 5.5-inch 1080p screen, 2.5GHz quad-core Snapdragon 801 processor, 3GB of RAM, and a 13MP main camera backed by a 5MP front-facing camera. To make it even more tempting for Android fans it runs CyanogenMod and offers a world of customization options. That proposition has generated an incredible buzz and lots of potential sales.

While OnePlus is still all potential (the company hasn’t released any numbers yet), Xiaomi is growing into a real player. Last quarter Xiaomi claimed the top spot in China with 14 percent of the market. Its budget Redmi series has been selling like hot cakes, and no wonder, the Redmi Note has a 5.5-inch 720p display with MediaTek’s octa-core MTK6592 processor. It comes in two flavors, a 1.4GHz and 1GB RAM model for $129 or a 1.7GHz and 2GB RAM model for $159. At the premium end of the market, phones like the Mi 4 are eye-catching, with a 5-inch 1080p display, 2.5GHz quad-core Snapdragon 801, 3GB of RAM, and 13MP and 8MP cameras for only $320.

But price alone isn’t enough to build an empire. There’s another big factor you can point to in the rise of recognition for both Xiaomi and OnePlus.

Listening to the customer

It’s depressingly common to find loyal customers of a brand shouting in the wilderness of comment sections and forums and having their heartfelt opinions ignored by their chosen corporate behemoths. An awful lot of OEMs simply do not engage directly with customers. They don’t acknowledge criticism or advice, they don’t share future plans, and they are rarely forthcoming or honest about problems.

A study on Millennials by digital agency Moosylvania revealed that 18-34 year-olds overwhelmingly dislike paid ads online and particularly on social media. They respond to digital word of mouth, positive reviews, how-to guides, and video reviews. They also do a lot of comparison research before buying and they seek authenticity. They want brands that answer questions and offer transparency.

Mi Fans

Xiaomi has been working on building a real relationship with its fans. Customer’s comments and questions are answered on social media. Feedback is acted upon. There are multiple competitions that encourage engagement and Xiaomi gives away lots of free phones. There are even Mi Fan Festivals with sales slots for phones with discounts. According to The Next Web Xiaomi sold 170,000 stuffed toy versions of its Mi Rabbit mascots at a Mi Fan Festival back in April.

Hugo Barra Xiaomi -21

This fan-centric approach has been part of Xiaomi from the beginning. The company was founded in 2009 and it developed the MIUI platform by forging strong links with the end user through social media and forums. Establishing a user feedback loop and giving people what they want is a smart move. It’s a central tenet of the agile development philosophy and Xiaomi carried it over to hardware when it decided to make a smartphone.

This isn’t just about responding to comments, Xiaomi organized its fans and invited them to participate in development, testing, and marketing for its products. The company held regular city gatherings and invited fans to talk directly to engineers. This is doubly smart because it builds a better product and it builds fierce loyalty.

xiaomi mi 4 press (5)

Ups and downs for OnePlus

A combination of amazingly low price, quality build, and the control and customizability offered by the CyanogenMod propelled the OnePlus One into the limelight. It’s tough to think of another smartphone from an unknown company that has generated anything like this level of excitement. OnePlus also saw the value in engaging potential customers and getting them involved in the design process. The company carries the motto “Never settle” and it put “Designed together with our fans” on the box.

Some of the shine rubbed off when it was revealed that Oppo owns OnePlus. The company was founded by Pete Lau, previously the VP at Oppo, but it was assumed by many that OnePlus is an entirely new and separate entity. The idea that it might be a clever strategy from Oppo’s marketing department to benefit from underdog status with OnePlus has turned some people off. The company claims it merely shares investors with Oppo and is entirely separately run.

It hasn’t all been good news for OnePlus on the marketing front either; the company has struck out twice already swinging for that elusive viral social media hit. First there was the ”Smash the Past” campaign, which was a competition offering people willing to smash up their old phones on camera a brand new OnePlus for $1. Unfortunately a few people were over-eager to smash their phones and jumped the gun before finding out the competition rules. It also created a huge backlash from critics justifiably feeling that the whole idea was environmentally irresponsible and wasteful.

ladies-first-opo

OnePlus followed that up with the cringingly misogynist “Ladies First” competition appealing to women to send photos of themselves with the OnePlus logo. It backfired spectacularly and got pulled pretty quickly. It’s back to the drawing board for the OnePlus marketing department.

Limited supply

Both Xiaomi and OnePlus have been accused of limiting supply to generate artificial product shortages and drive the hype machine. The same criticism has been leveled at Apple in the past. As you’d expect the companies deny it and claim the issue is about making sure they can deliver a product to everyone that orders. We can’t say for sure, but there’s no doubt that selling out quickly and a feel of exclusivity are powerful marketing techniques that generate more free headlines.

Ultimately, the most powerful and refreshing aspect of the approach of Xiaomi and OnePlus is the effort to engage with customers and give them what they want. We can only hope that rubs off on the industry. Few of us would complain if the big OEMs spent more time answering customers and a little less on advertising. It will be interesting to see if this approach is enough to drive further success and if that ethos will be retained if success does come.

Comments

  • Bradley Uffner

    It doesn’t matter how well or poorly they market the phone if you can’t actually go out and buy one without winning the invitation lottery yet. There are plenty of people right now who want to buy it but can’t because they are not letting people buy it

    • s2weden2000

      You can buy it allover over the net for 5o$ extra

      • JDMillest

        but you can only buy china version, and they will flash CM11 on there. theres no way you can get the international version without an invite that i know of.

        • s2weden2000
        • WTF

          There are several sites that a quick search will give you. The sites can give the international or the China version, with the ROM of your choice. They cost about a $80-100 more. It is readily available and the stocks are only limited for the “invitations” that all the press got and the ones the press gave away!
          One plus one is doing a very clever marketing campaign and its working brilliantly, US media has bought it hook and sinker. Not sure if this can be called clever marketing or fraud! Even for around $400 its a good price, but they sure gamed the system pretty badly.

        • WTF

          FYI:
          oiostore.com/oneplus-1-55-4g-fddlte-msm8974ac-25ghz-mobile-phone-p-293.html#.U_U8TerlrX4
          Here goes one of the places with a free flow of phones!

  • MasterMuffin

    I hear more and more negativity towards OnePlus, so they should really work something out or they’ll be the next Apple in terms or hate (but not in terms of sales). I guess CM fans will buy their future phones no matter what though.

    Xiaomi beat Samsung which is really good, but they can never really enter USA or Europe or they’ll get sued instantly. 60% of people live in Asia and they’re becoming richer every day, so that shouldn’t really be a problem if they can keep getting bigger in China and other countries in there.

  • Luka Mlinar

    The answer is no. Xiaomi makes awesome phones but have this iOS like OS that’s popular in China but not in other places. If they wore to make a separate OS that’s closer to vanilla or at a least port Color OS on their device than yes, they have a chaise.
    OnePlus on the other hand have this awesome product and and awesome concept in therms of a company but they seem to have a ton of incompetent and if i may say childish people working there that seem to know how to build a phone but have absolutely no cue as to how to run a company.
    These company’s have a good chance at taking a hige peace of the market but unless they drastically resolve their issues, then they won’t be moving much in any direction.

    • Amit_N

      Xiaomi makes good part of there profits from the services that are being provided in MiUi OS.
      If they start making vanilla android , it won’t be profitable for you.
      I highly doubt that it is difficult to root this device and customize to your needs..
      Being running high end hardware , it must be easy for hackers to get AOSP / CM running on this thing.

      • Luka Mlinar

        Yea but that’s no the point. With OPPO you don’t lose your warranty if you flash CM on your device. I just don’t see them moving forward with that OS/system in place.

        • Airyl

          What exactly do you not like about MIUI?

      • thomas sim

        We do understand they make profit from their own market store and services, however those are more likely target towards their homeland users. If they were tailor make their Rom and services toward international users on the international units, it’s good.
        One Plus One had several ROM choices, there’s color OS in China version, CM on international, but there’s also official AOSP Rom etc.

  • Anonymousfella

    Can they beat multi-billion dollar budget? No. It is however better than fighting toe-to-toe and fail like HTC and Sony are doing. This approach is probably the best for them…

  • a+1

    can you guys do a review on mi3 and mi4, both? pls its a REQUEST and then also do a comparison between one mi3/mi4

  • RH

    The thing that is propelling these two are THE PRICE. People like me want VALUE for their money. I’m sick of paying hundreds of dollars for a device, that is bloated, locked down with features stripped out, and if you are LUCKY, you MIGHT get a software update within 2 years!
    While waiting for OnePlus to give the opportunity to spend my money (came 12 July), I heard on the oneplus forums about the Ascend Mate2. For 300 bucks, what the heck, I can always turn it on ebay or send it back to Amazon. It has changed my thoughts on high end spec phones. Personally, they are stealing your money, for what you get. Here is a 720p 6″ screen, 2gb ram, snap400, jb4.3 phone with a 4000mAH battery that, if you run benchmarks, is way down on the list. 16000-17000 on Antutu compared to almost 48000 on my OnePlus One. But, it’s fast, no lag, keeps up with everything I use it for and a battery that lasts FOR DAYS! I don’t watch movies on mine, or play games. It’s a business device…lots of phone, email, web, photos and IT WORKS! To some extent, I think people are being suckered by the high end stuff. Never touching the top end of what it can do, but paying the price, in how much it costs, plus suffering battery life.
    The midrange spec phone the Mate2, coupled with straight talk, over a 24 month period, runs me $1,475. If I were to buy a Galaxy S5 from at&t, under contract, with a plan similar to the straight talk plan, over that same 24 month period (2 year contract), would run me $3,425. With an MVNO, buying the mate2 outright, I save almost $82 dollars PER MONTH, almost 2,000 dollars in 2 years!

  • Falex

    Their customer services and handling of situations need to be highlight. If you follow the forums you will understand OnePlus’s horrible services. OnePlus is censoring the forums to hide the yellow banding issue. They have combined many yellow band threads into 1 giant thread to bury it and then to make it worse have censored about 300 pages of post keeping the page count under 200. Don’t trust OnePlus they are liars who don’t honor warranty or RMAs. Instead they say the yellow banding is a feature.

    • Max

      This. Few people know about OnePlus Nazi censorship on their forum. They are hiding issues by deleting hundreds (!!!) of pages and banning hundreds of complainers on the forum.
      Pete and Carl, and I’m not entirely sure those are their real names, are liars, but people keep ordering their product just because they are fooled by the desire for an high end cheap phone

      • crisgen

        Ups and downs for OnePlus
        A combination of amazingly low price, QUALITY BUILD…
        Ahahahahahahahahahahahahah
        The first brand that classified hardware defects like features.
        Yellow band and grounding issue…..and about these issues Oneplus continue censoring on his forum. “Never Settle”?….Better say “Never More” Oneplus.
        After a month I’m still fighting in pm for obtain a RMA. They don’t admits the grounding issue with an announcement but only in pm after open a ticket for assistance.
        Why Android Authority don’t call Pete and Carl and ask some clarification about follow question:
        Yellow band, Grounding Issue, censoring and banning and a customer service?

  • star

    Hello everybody. I would just like see some opinions on why Sony and HTC is failing to gain adequate market share. I would really like to see your opinions.

    • Ivan Budiutama

      Sony is actually do quite well here (Indonesia). Their mid-range are getting a lot of attention as well. The Xperia M2 is very popular here. Also the flagships are doing well too. The only complain is their service center, well Sony promised to provide better support and revamping the Service Center but I barely see the result.
      HTC is just so so, their market is still limited to tech savvy guys. Thanks to Samsung’s insistence to only release Exynos version of their flagships, and people got quite a lot of sudden death (on S3) and significant performance issue, HTC and other non-Exynos flagships are getting more attention here (at least on tech savvy people). What preventing HTC from gaining more market share is the lack of Service Center. In Sony’s case it is the quality but in HTC’s it is the quantity. Most people buying unlock version of the phone at full price is no coincidence here.

      • star

        Thank you Ivan.

  • milagroful

    Its not going viral, its going cheap. If samsung cut all their prices in half and stopped putting billions in marketing you’d see some serious sales

  • dev

    See: smart-wiki.pl

  • jake

    Looks like another black brick just like everyone else. I have seen lots of great looking ids in pictures, but not so great in real life.

    http://jaxily.com
    https://play.google.com/store/apps/details?id=com.jaxily.winggo

  • jay

    One plus all the way! Awesome phone

    • Max

      …. and awful people