Carl Pei’s Nothing plans to launch smartphone in US to take on iPhone

UK-based consumer technology company Nothing is eyeing the US, with ambitions for growth Apple’s iPhone.

For starters, Carl Pei — the founder of Chinese smartphone maker OnePlus — is in early talks with U.S. carriers about launching a new smartphone in the U.S., Pei told CNBC, without naming the company. one of the photographers is not.

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

The company, which is backed by iPod creator Tony Fadell and Alphabet’s VC arm GV, has only launched its phone in Europe, the Middle East and Asia so far – not the US or Canada.

“The reason why we haven’t launched it in the US is because you need a lot more technical support, to support all the carriers and the special customizations that they need to do on top of Android,” Pei explained in an interview with CNBC. . “We felt that we were not prepared before.”

“Now we are talking with some dealers in the United States for the possibility of launching a product there in the future,” said the Chinese-Swedish businessman.

Like them Apple same to you Samsung they already have relationships with major US retailers, making it difficult for smaller companies to compete.

But a third of the sales of the recently launched headphones come from the United States, Pei said.

“It’s definitely a market where there is already interest in our products. And if we launch our phones there, I’m sure we can make a lot of progress,” he said.

The company expects its revenue to jump tenfold in 2022 – from about $20 million in 2021 to about $250 million this year, according to figures shared with CNBC exclusively. He also doubled his workforce to more than 400. However, the company was losing money.

“The goal is to be profitable in 2024,” Pei said. “We are not profitable now, and this year it has worsened due to foreign currency exchange, we are paying a lot of COGS. [cost of goods sold] in US dollars but we get money in pounds, in euros, in Indian rupees – so everything is devalued against the USD.”

The US dollar has risen sharply this year; and American dollars – which measures the greenback against a basket of major currencies – is up more than 8.5% year to date.

Pei wants to challenge Apple’s iPhone in the U.S. But he has a steep hill to climb.

“There’s a challenge with Android where iOS is becoming more and more powerful. They have a strong lock-in with iMessage, with AirDrop, especially among Gen Z. So that’s a rising concern,” he said.

“There was a time when Apple was like 80% of the overall market and that didn’t leave enough room for Android manufacturers to keep playing,” he said.

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

Pei said he sympathizes with Elon Musk, who as Twitter’s new CEO has pressured Apple over its App Store ban and 30% fee on in-app purchases.

He added that, in two years, nothing could “think seriously about this problem and how we can solve it.”

“It will put a lid on our progress,” Pei said.

Pei said his company faced many challenges in bringing its products to the market. One of the biggest setbacks she faced was when she approached Foxconn, Apple’s main iPhone maker, to manufacture its phones.

According to Pei, Foxconn refused to do business with None, pointing to the failure of the phone industry.

“Every startup manufacturer has worked with Foxconn,” Pei said. “But when the time came, they said no because every company they worked with failed. And every time a company failed, Foxconn lost money on it, they couldn’t get their money back. .”

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

The Covid restrictions around the world have also presented a significant obstacle to the company. In India, where no one manufactures its phones, the company has been unable to export engineers due to travel restrictions, with Pei saying the company has to operate the factory on the ground remotely.

“We were definitely quick to create this,” he said of the Nothing phone.

In Shenzhen, China, where officials have imposed a strict lockdown, engineers are not supposed to discuss designs with engineers during the 45 minutes required when people are allowed to go outside to buy groceries.

Nothing has sold more than 1 million units worldwide to date, with the earphones (1) selling 600,000 units and the phone (1) reaching 500,000 units.

However, the startup is a small player, and it is facing a bad economic climate where people are forced to severely limit their spending.

In Europe, shipments of smartphones fell 16% in the third quarter of the year, although they were slightly higher than the previous quarter at the end of the launch of the powerful iPhone 14.

Samsung is the largest mobile phone manufacturer in Europe with 35% of the market, followed by China’s Xiaomi with 23% and Apple with 21%.