Why is the $299 OnePlus One so cheap? Because they're selling it at cost

There were many who doubted that OnePlus could deliver on its promise to deliver a high-end device at a low price, particularly after the company said it would be made available for under $500, before later revising that downwards to under $400.

And yet, the company finally unveiled its long-awaited One with a price tag of just $299 for the entry-level 16GB model (and $349 for the 64GB version) – a remarkable price, given the device’s flagship-class specs. The OnePlus One includes a quad-core 2.5GHz Qualcomm Snapdragon 801 processor, 5.5-inch display with 1080p resolution, a 3100mAh battery and 3GB of RAM, along with a 13MP six-lens rear camera and a 5MP cam up front.

Those specs put the One up against the likes of Samsung’s Galaxy S5 and the Nokia Lumia Icon – handsets that cost almost twice as much. So just how on earth does OnePlus do it?

The answer is that the company isn’t making a profit on the devices at all, as its CEO, Pete Lau, explained to TechRadar. “We are selling the phone at cost,” he said. “We are able to do that by redistributing our costs to better benefit the user.”

He added that the company is taking a somewhat different approach to marketing the device, compared with larger manufacturers. Samsung, for example, spent an astonishing $14bn on worldwide marketing last year, which International Business Times reported was the largest proportional advertising spend of any company in history. Needless to say, a start-up smartphone brand with just one device can’t compete with that kind of dough.

“Rather than put money towards a large marketing budget,” Lau said, “we are focusing on online marketing and community interaction. Rather than working with retail partners, we rely on selling the device online." 

The company's approach to marketing and retail has caused some headaches so far, however. Those who wish to purchase the device cannot do so unless they have an invite, which can only be acquired from someone who has already purchased the handset, or by entering 'contests and promotional events' on the company's forums and social media channels. As we reported previously, this 'invite system' has already been met with considerable backlash from the community, but the company hopes to increase availability of the device in late June. 

Source: TechRadar | image via OnePlus

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