OnePlus does not sell “affordable flagship” smartphones anymore. The brand is losing its price advantage to competitors.

If the launch of the new iPhone SE and OnePlus 8 series in the past few days is any indication, it appears both Apple and OnePlus are headed in opposite strategic directions. Apple is targeting a wider audience with the $399 iPhone SE, while OnePlus eyes more premium buyers with the OnePlus 8 series which starts at $699. Surprisingly, the price difference between OnePlus 8 and iPhone SE is just Rs 500 ($6.58) in India.

Why Apple’s latest iPhone SE is a threat to competitors

“While OnePlus has been packing its new phones with competitive specs and climbing-up the value and price ladder, Apple’s strategies have revolved around being nimble and defining new battlefields for its hardware,” Prabhu Ram, Head-Industry Intelligence Group, CMR, told indianexpress.com over mail. “The fact that Apple is a platform player also works in its favour.”

Apple has been well-known for charging more for its smartphones than the competition, but the new iPhone SE undercuts every mid-range and even flagship smartphones. Coming in at $399, the new, second-generation iPhone SE is aimed at those customers who haven’t bought the iPhone XR or iPhone 11. With Apple pushing up the price points of its new phones over the past few years, a lot of iPhone 6 and iPhone 6s users are still holding on to their phones. The iPhone SE should give those users a reason to upgrade to a new iPhone even in unprecedented times like these.

OnePlus’ latest flagships cost more than their predecessors.

“I think Apple is targeting the lower end of the spectrum in a lot of mature markets where people are looking to buy a new phone but has held off because they cannot afford the more expensive iPhones,” commented Rushabh Doshi, Research Director at research firm Canalys.

If someone upgrades from the iPhone 6 or iPhone 6s to the new iPhone SE, they won’t find drastic changes in design or look or feel. Unlike the iPhone XR or iPhone 11, the iPhone SE has a small 4.7-inch screen and a physical home button. But what really works in favor of the iPhone SE is Apple’s A13 Bionic chip, which can also be found in the iPhone 11 and iPhone 11 Pro. Plus, you also get a single 12MP camera with Portrait mode, wireless-charging, fast-charging and dual SIM. And, of course, regular software updates for at least four to five years.

In many ways, the iPhone SE represents the new Apple, which is headed by Tim Cook and not Steve Jobs. By selling an iPhone for $399, the company will further hold on to its loyal customers while reeling in Android users into its ecosystem to later sell costlier iPhones, Apple Watches, iPads and AirPods. The iPhone SE also gives Apple the opportunity to sell services like Apple TV+, Apple Arcade, Apple Card and the App Store. That way Apple can still maintain the desired growth without impacting revenues and profits.

On the other hand, OnePlus’ strategy is in complete contrast to what Apple has done in the past few months. Apple is going out of the way by adding affordable and premium mid-range options in the iPhone lineup. OnePlus, on the other hand, isn’t looking at affordable flagships anymore. Yes, it still sells flagship smartphones with premium specs but the cost of its handsets has risen significantly. Take the case of the new OnePlus 8 series. Its latest phones, the OnePlus 8 and OnePlus 8 Plus start at $699 and $899 in the US, a market OnePlus is desperate to win.

The iPhone SE is Apple’s cheapest smartphone in its current iPhone lineup.

In India, however, the OnePlus 8 series are cheaper to buy compared to the US or China but both the phones still cost more than OnePlus’ previous flagships. The OnePlus 8 starts at Rs 41,999, while the OnePlus 8 Pro costs Rs 54,999 for the base variant. A year ago, OnePlus 7 and OnePlus 7 Pro started at Rs 32,999 and Rs 48,999, respectively.

OnePlus may blame the rising prices of its smartphones to the higher cost of the Snapdragon 865 processor, 5G modem and other components. In a way, OnePlus is right. Smartphone prices are going up due to the rising prices of the components, so it is hard to sell a flagship phone at a cheaper price.

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OnePlus does not seem to adhere anymore to the concept of selling “affordable flagships”. The OnePlus 8 may have many things going for it — the right design, the right specs, the right cameras and 5G support –but it’s not exactly an impulse buy at that price. OnePlus users would think twice before shelling out Rs 41,999 for an upgrade.

It is for the first time that OnePlus is feeling the heat from Apple, a brand it likes to emulate and, ultimately, replace. Unlike OnePlus, which only offers high-end phones, Apple has been gradually widening its portfolio. It has an iPhone for different consumers and different price points. Now with flagship price points where they are, OnePlus will face more challenges when the iPhone 12 series is launched later this year.

“While the iPhone SE is focused on the India market, it will also be an exciting option for those in other geographies who have been impacted by the COVID19 and have a lesser budget than before,” Ram said. “The India pricing is aggressive, but slightly on the higher side. Apple should assemble the new iPhone SE in India to pass the duty benefits to local customers.”

The OnePlus 7 was a budget option in comparison to the iPhone XR.

However, despite the increasing price tags, OnePlus’ smartphone prices are still significantly lower than Apple’s flagship phones. Ram agrees that the audience for Android phones is different, and also warns that the “brand pull of Apple may attract new brand-agnostic users to switch from other brands operating at a similar price point”. iPhone SE and OnePlus 8 will operate in the same price band in India.

“If you look at it from an India perspective, it probably doesn’t make sense. But if you look at it from a global perspective, users who are on telecom contracts, who want a cheap phone and don’t want to pay an upfront cost for the phone and want low monthly tariffs including equipment rental fees, for them probably the iPhone SE is perfect,” said Doshi.

Apple iPhone XR was the world’s best selling smartphone in 2019.

Doshi does not see any “erosion” between OnePlus 8 and iPhone SE in India. “The only reason why people might go for an iPhone SE, if they have an old iPhone and they are upgrading and they want something that’s more affordable. I don’t think OnePlus 6 or OnePlus 7 user would upgrade to the iPhone SE.”

But he also said that OnePlus needs to reevaluate its pricing strategy as well its smartphone strategy going forward. Doshi said OnePlus’ ASP for the smartphone has gone up but at the same time they are losing valuable customers who cannot afford those phones anymore. The analysts believe OnePlus should launch a phone in the range of Rs 22,000 to Rs 25,000 price range now and get back the market share.