OnePlus One is only $299 because it's sold at cost, says CEO Peter Lau
Revealed: the reason the OnePlus One is so cheap — EXCLUSIVE New brand relying on word of mouth over marketing … OnePlus CEO Peter Lau has revealed to TechRadar how the company is able to offer its flagship handset …
Context & Ripple Effects
OnePlus entered the handset market with a $299 debut device built around Cyanogen software partnership, then positioned it as a high-spec alternative to established flagship phones. A May review reinforced that positioning by finding the phone delivered a premium experience at its price.
Peter Lau's explanation supplies the operating model behind that promise: OnePlus is forgoing hardware margin and conventional marketing, while preparing for general availability planned for June. The strategy depends on product reception translating into demand without a large promotional budget.
First-order effects
- OnePlus can use the $299 price as its primary acquisition tool, but it must convert favorable premium-quality reviews and word of mouth into sales rather than buying broad consumer awareness.
- Cyanogen receives distribution through OnePlus's first handset, tying the software partnership directly to the phone's ability to stand apart at a low price.
Second-order effects
- For established smartphone brands selling against the OnePlus One, a premium experience at $299 makes the relationship between handset price, marketing spend, and product quality more visible to buyers.
- OnePlus's low-margin model puts greater pressure on its manufacturing and June availability plans: constrained supply would limit the word-of-mouth engine the company is relying on.
Third-order effects
- If low-margin, community-led launches prove repeatable, new handset brands can use software partnerships and product advocacy to challenge incumbents without matching their marketing budgets.
- The model shifts competition toward whether a vendor can sustain demand and distribution with little hardware margin, rather than treating launch advertising as the default route to scale.
The trend: The OnePlus One is an early example of smartphone entrants using aggressive hardware pricing and community-led promotion to substitute for conventional marketing spend.