QUALCOMM 3G/LTE SUMMIT, HONG KONG: In an industry that continues to follow the same trends, newcomer Obi Worldphone is out to buck that approach and make a profit at the same time, said former Apple CEO John Sculley, who is now CEO at smartphone maker Obi.
“Our goal is not to look like anyone else and see what we can do with the user experience,” he said at the event yesterday. “Why does the industry think it has to always be the same? First everyone was focused on the OS, then they shifted to the web, now it’s all about native apps.”
He said that a design-led company doesn’t go to an OEM and say “here are the features we want.”
“We are seeing how we can succeed as a design-led company in an industry that is commoditised.”
Obi launched two low-cost Obi Worldphones at an event in San Francisco in late August and plans for the models to be available in 14 countries by the end of the year. It is targeting 70 countries in the long term. “We want to be a world phone and not just be in one or two markets so we are building out global partnerships.”
Obi is focused on the $150-$250 range because it is the fastest growing segment and has room for a profit margin. Sculley gave the example of India, where smartphone shipments grew 44 per cent last quarter.
“We will take advantage of our more nimble cost structure and make money at those price points. Because we own supply-chain companies and IT distribution businesses that have nothing to do with Obi, we can tap into that experience all over the world to keep our costs down,” Sculley said.
That lower cost structure, he said, allows it to “offer high-end components and great value without compromising on the technology”.
New business model
As prices continue to fall, he said companies with a traditional business model will find it hard to make money unless they radically change their business model. Sculley pointed to a figure from Canaccord Genuity that estimates Apple’s share of global smartphone profits at 92 per cent.
Sculley recently met with Xiaomi CEO Lei Jun, who said it is not a smartphone company but an internet company. The Chinese firm reportedly sells its smartphones at close to the bill of material.
As Chinese firms look to move beyond China and other new markets, he said that some may be successful, but others will face cultural issues that will make expansion difficult. That is where Obi, with its international connections, claims to have an advantage.
As he was recruiting staff for Obi, Sculley said he spoke with people he had worked with at Apple who were previously with Beats, the headphones firm Apple purchased. He ended up taking the whole team that developed the Beats products and brought them in as equity partners.
“I’m excited because we’re still at the early days of what is possible. We haven’t seen the end of creativity in what the ecosystem can be in the future and it is going to be around customers, it is going to be around user experience,” Sculley predicted.
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