OnePlus co-founder Carl Pei wants to launch a smartphone in the US to take on Apple

Phone None (1).

nothing

UK-based consumer technology company Nothing sets its sights on the US, with ambitions to go further An apple Iphone.

Pei told CNBC that the startup, the hardware venture of Carl Pei — co-founder of Chinese cellphone maker OnePlus — is in early talks with US carriers about launching a new smartphone in the US, without naming any carriers.

In July, it launched Nothing Phone (1), a mid-range device with a similar design, price, and specs to Apple’s entry-level iPhone SE.

The company backed by iPod creator Tony Fadell and alphabet VC arm GV has only launched its smartphone in Europe, the Middle East and Asia so far – not the US or Canada.

“The reason we haven’t launched in the US is because you need a lot of additional technical support, to support all the carriers and their unique customizations that they need on Android,” Pai explained in an interview with CNBC. . “We felt like we weren’t ready before.”

“We are now in discussions with some carriers in the United States to launch a future product there,” said the Chinese-Swedish businessman.

Proverbs apple And the Samsung It has already established relationships with large US carriers, making it difficult for smaller companies to compete.

Pai added that a third of the sales of its recently launched earphones (sticks) are currently coming from the United States.

“It’s definitely a market where there’s already a lot of interest in our products. And if we launch our smartphones there, I’m sure we can achieve significant growth,” he said.

The company expects its revenue to jump more than tenfold in 2022 — from about $20 million in 2021 to an estimated $250 million this year, according to numbers shared with CNBC EXCLUSIVELY. It also more than doubled its number of employees to more than 400. However, the company is still losing money.

“The goal is to be profitable in 2024,” Pai said. “We are not making a profit at the moment. This year has been made more difficult by foreign exchange. We pay a lot of our cost of goods sold [cost of goods sold] in US dollars but we make money in sterling, euros and Indian rupees – so everything has depreciated against the US dollar.”

The US dollar has risen this year. The dollar index – which measures the greenback against a basket of major currencies – is up more than 8.5% since the start of the year.

Apple took

Pei wants to challenge Apple’s iPhone in the US, but it’s a steep hill to climb.

“There’s a challenge with Android where iOS is becoming more and more dominant,” he said. “They have a very strong association with iMessage, with AirDrop, especially among Gen Z. So that’s a growing concern for me.”

“There may be a time when Apple is like 80% of the total market and that doesn’t leave enough room for Android manufacturers to keep playing,” he said.

Apple was not immediately available for comment when contacted by CNBC.

Pei says he sympathized with Elon Musk, who as Twitter’s new CEO pressed Apple about App Store restrictions and a 30% fee for in-app purchases.

In two years, he added, nothing will have to “seriously think about this problem and how to tackle it.”

“It will create a ceiling for our growth,” Pai said.

David versus Goliath

Pai said his company faced a large number of challenges in bringing its products to market. One of its major setbacks was when it approached Foxconn, Apple’s largest iPhone supplier, to manufacture its phones.

According to Pei, Foxconn has refused to do business with Nothing, citing past failures in the smartphone industry.

“Every startup manufacturer has worked with Foxconn,” Pai said. “But when it was our turn, they said no because every startup they worked with failed. Every time a startup fails, Foxconn loses money, they couldn’t recoup their costs.”

Foxconn was not immediately available for comment when contacted by CNBC.

Covid restrictions around the world were also a major hurdle for the company. In India, where none produces its phones, the company has been unable to send engineers due to travel restrictions, with Pai saying the company had to remotely manage its factory on the ground.

“We really had to work hard to create this,” he said of Nothing’s Smartphone.

In Shenzhen, China, where officials imposed strict lockdowns, nothing engineers had to discuss component designs and mechanics during mandatory 45-minute periods when it was okay for people to go out grocery shopping.

Not yet more than 1 million products have been sold globally, with the earbuds (1) selling 600,000 units and the phone (1) reaching 500,000 shipments.

However, the startup is a small player, and faces a bleak economic outlook as people are forced to drastically reduce their spending.

In Europe, smartphone shipments fell 16% year-over-year in the third quarter, although they were up slightly from the previous quarter on the back of the strong launch of the iPhone 14.

Samsung is the largest smartphone maker in Europe with 35% market share, followed by China’s Xiaomi with 23% and Apple with 21%.

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