Nothing Phone (1).
UK-based consumer technology company Nothing is eyeing the US with its ambition to take over. Apples iPhone.
The startup, the hardware venture of Carl Pei, co-founder of Chinese mobile phone maker OnePlus, is in early talks with American carriers about the launch of a new smartphone in the US, Pei told CNBC without naming any carriers.
In July, Nothing released the Phone (1), a mid-range device with similar design, price, and specs to Apple’s entry-level iPhone SE.
The company, backed by iPod creator Tony Fadell, and of the alphabet VC arm GV has only launched its smartphone in Europe, the Middle East and Asia so far – not in the USA or Canada.
“The reason we don’t launch in the US is because you need a lot of additional technical support to support all carriers and their unique customizations they have to do on Android,” Pei said in an interview with CNBC. . “We felt we weren’t ready before.”
“We are currently in talks with some carriers in the US to potentially launch a future product there,” the Chinese-Swedish entrepreneur said.
likes Apple and SAMSUNG It has already established relationships with major US airlines, making it harder for smaller firms to compete.
However, Pei added that a third of the sales of the recently released Ear (stick) headphones currently come from the United States.
“This is definitely a market where there is already a lot of interest in our products. If we launch our smartphones there, I’m sure we can achieve significant growth,” he said.
According to figures shared only with CNBC, the company expects revenue to grow more than tenfold in 2022, from around $20 million in 2021 to an estimated $250 million this year. It has also more than doubled its number of employees to over 400. But the company is still losing money.
“The goal is to be profitable by 2024,” Pei said. “We are not profitable at the moment. And this year has been made more difficult because of the foreign exchange. We pay most of our HCPs. [cost of goods sold] We’re making money in USD, but in pounds, euros, Indian rupees – so everything is devalued against the USD.”
The US dollar rose this year; the dollar index The index, which measures the US dollar against major currencies, has risen by more than 8.5% since the beginning of the year.
take over Apple
Pei wants to challenge Apple’s iPhone in the US, but it’s a steep hill to climb.
“There’s a challenge on Android where iOS is becoming more and more dominant. They have a very strong commitment to iMessage and AirDrop, especially among Gen Z. That’s a growing concern for me,” he said.
“There may be a time when Apple accounts for 80% of the overall market and doesn’t leave enough room for Android-based manufacturers to continue playing,” he said.
Apple’s active installed base, which takes into account second-hand phone purchasers, surpassed Android by more than 50% in the US in the second quarter, according to data from Counterpoint Research.
Apple was not immediately available for comment when contacted by CNBC.
Pei says he has sympathy Elon MuskPressing Apple as Twitter’s new CEO App Store restrictions and 30% fee for in-app purchases.
He added that in a few years, Nothing “may need to think seriously about this problem and how we’re going to deal with it.”
“It will create a ceiling for our growth,” Pei said.
David vs. Goliath
Pei said his company faced numerous challenges in getting its products to market. One of the biggest setbacks he faced was when Apple approached Foxconn, the largest iPhone supplier, to manufacture its own phones.
According to Pei, Foxconn refused to do business with Nothing, citing past failures in the smartphone industry.
“Every startup manufacturer has worked with Foxconn,” Pei said. “But when it was our turn, they said no because every attempt that worked with them failed. And every time that attempt failed, Foxconn was losing money on that and they weren’t able to recoup the costs.”
Foxconn was not immediately available for comment when contacted by CNBC.
Covid restrictions around the world have also been a major hurdle for the company. In India, where Nothing produces its phones, the company couldn’t get engineers out due to travel restrictions, and Pei said the company had to manage its factory remotely.
“We really had to rush to create this,” he said of Nothing’s smartphone.
In Shenzhen, China, where authorities have imposed strict lockdown, Nothing’s engineers had to discuss component designs and mechanics during mandatory 45-minute periods when it was acceptable for people to go out to shop for groceries.
Nothing to date has sold more than 1 million items worldwide, while the Ear (1) and Ear (rod) headphones sold 600,000 units and the Phone (1) reached 500,000 shipments.
Still, the startup is a small player and faces a bleak economic outlook, with people being forced to drastically limit their spending.
Smartphone shipments in Europe fell 16% year-on-year in the third quarter of the year – but slightly increased from the previous quarter following the strong launch of the iPhone 14, according to Counterpoint Research data.
Samsung is Europe’s largest smartphone manufacturer with a 35% market share, followed by Chinese Xiaomi with 23% and Apple with 21%.
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