British consumer technology company Nothing has set its sights on America, with ambitions to go further An apple iPhone.
Chinese mobile phone maker OnePlus co-founder Carl Pei’s hardware startup is in early talks with US carriers about launching a new smartphone in the US, Pei told CNBC, without naming the carriers.
In July, it launched the Nothing Phone (1), a mid-range device with a similar design, price and specifications to Apple’s entry-level iPhone SE.
The company is backed by iPod maker Tony Fadel and others letters VC arm GV has so far only launched its smartphone in Europe, the Middle East and Asia – not in the US or Canada.
“The reason we haven’t launched in the US is because you need more technical support to support all the carriers and their unique customizations that Android needs,” Pai explained in an interview with CNBC. . “We felt we weren’t ready yet.”
“We are now in talks with some carriers in the US to launch a future product,” said the Sino-Swedish businessman.
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Pai added that one-third of the sales of the recently introduced earphones (Stix) now come from the US.
“It’s definitely a market that already has a lot of interest in our products. I believe we can achieve significant growth if we launch our smartphones there,” he said.
The company expects revenue to grow more than tenfold by 2022, from about $20 million in 2021 to an estimated $250 million this year, according to figures shared exclusively with CNBC. It has doubled the number of employees to more than 400. However, the company is still losing money.
“The target is to be profitable by 2024,” Pai said. “Currently we are not making profit. This year has been made difficult by foreign exchange. We pay a lot in cost of goods sold. [cost of goods sold] In US Dollars, but we make money in Sterling Pounds, Euros and Indian Rupees – so everything has depreciated against the US Dollar.
The value of the US dollar has risen this year. The Dollar symbol — which measures the greenback against a basket of major currencies — is up 8.5% since the start of the year.
Pei wants to challenge Apple’s iPhone in the US, but that’s a steep hill to climb.
“There’s a challenge with Android, where iOS is becoming more and more dominant. They have a very strong connection with iMessage, with AirDrop, especially among Gen Z. So that’s a concern for me.
“There may come a time when Apple controls about 80% of the total market, and that doesn’t leave enough room for Android manufacturers to play,” he said.
Apple did not immediately comment when reached by CNBC.
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In two years, he added, “nobody will have to think seriously about this problem and how to deal with it.”
“It’s going to put a cap on our growth,” Pai said.
Pai said his company faced several challenges in bringing its products to market. One of its biggest setbacks was Apple’s approach to Foxconn, its biggest iPhone supplier, to make its phones.
According to Bee, Foxconn refused to do business with Nothing, citing previous 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 on had failed. Every time a startup fails, Foxconn loses money and they can’t cover their costs.
Foxconn was not immediately available for comment when contacted by CNBC.
Covid restrictions around the world are also a major hurdle for the company. With no one manufacturing the phones in India, the company could not send technicians due to travel restrictions. Pai said the company needs to manage its factory remotely on the ground.
“We had to work really hard to make it,” he said of Nothing’s smartphone.
In the Chinese city of Shenzhen, authorities have imposed strict lockdowns to prevent engineers from discussing component design and mechanics while people can shop properly.
More than 1 million products have been sold worldwide, of which earphones (1) have sold 600,000 units and telephones (1) have been shipped 500,000 times.
However, the startup is a small player and faces bleak economic prospects as people are forced to drastically cut their spending.
In Europe, smartphone shipments fell 16% year-over-year in the third quarter, although they were thanks to the strong launch of the iPhone 14 in the previous quarter.
Samsung is the largest smartphone maker in Europe with a market share of 35%, followed by Chinese Xiaomi with 23% and Apple with 21%.
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