Corporate China

Weibo: OnePlus tries smartphones, NQ sprints

PUBLISHED : Monday, 20 January, 2014, 5:16pm
UPDATED : Wednesday, 22 January, 2014, 5:11pm

Does the world really need another cool and trendy smartphone maker from China? At least one entrepreneur seems to think the answer is yes, with the launch of a new brand called OnePlus at an event last week in Beijing. Normally I wouldn't give too much attention to this kind of launch, since everyone in China is rushing these days to try and copy the trend Xiaomi, which itself is trying to copy the success of global tech giant Apple (Nasdaq: AAPL). But the fact that such a new company like OnePlus could attract so much attention for its event, including a blogosphere plug from global chip giant Qualcomm (Nasdaq: QCOM), is making me hedge my bets that perhaps this could be a company to watch. 

Meantime, mobile security software maker NQ Mobile (NYSE: NQ) was also making waves in the microblogging realm, as its chief executive trumpeted a new tie-up with US wireless carrier Sprint (Nasdaq: S). NQ watchers will recall that the company's shares tumbled last fall after it came under attack by notorious short seller Muddy Waters for allegedly inflating its numbers. I said at the time that the sell-off was probably a bit too extreme, and word of the company's latest big-name tie-up comes as its shares slowly claw their way back from last year's lows.

Let's start off our weekly look at the microblogging space with a brief post that caught my attention from Shen Jing, a vice president from Qualcomm and head of the company's China venture capital arm. Shen was just one of many VIPs who attended last week's formal launch of the OnePlus phone brand at a ceremony in Beijing. His post is quite simple and promotional, calling OnePlus' new phones: "simple, robust and attractive".

I had to do a little research to find out more about this new company, and learned that its founder is Liu Zuohu, another ambitious China techie who almost certainly wants to challenge the better-known Lei Jun, Xiaomi's co-founder and chief executive. OnePlus won't roll out its phones until the second quarter, but the company says it's aiming for an underserved higher end of the market, which is underscored by its choice to use pricey chips from Qualcomm. Liu's credentials include his previous stint as a top executive at Oppo Electronics, another Chinese electronics maker that he recently left to start OnePlus.

The reports I read didn't name any of Liu's backers, though it's clear that one is Qualcomm due to Shen's presence at the launch event. Qualcomm's promotion of this new brand is also clearly self-serving, since many of the lower-cost smartphones coming out of China these days use cheaper chips from names like MediaTek (Taipei: 2454) and Spreadtrum (Nasdaq: SPRD). Still, I do concur that most of the new smartphones coming out of China are clustered between the low and middle end, and that there could be room at the middle-to-upper range for a new player that can deliver a well-designed product. We'll have to wait until next quarter to see if OnePlus is that company.

Meantime, embattled NQ Mobile CEO Lin Yu is showing that he still has some fight left in him, as he trumpeted a new tie-up that will see one of his company's software platforms used on service from US carrier Sprint. The post breaks a period of relative silence for Lin, who has spent much of the last three months trying to repair damage to his company following the October Muddy Waters report that accused his firm of inflating its numbers. The company is also embarking on a new advertising campaign in Beijing, indicating it may think the worst of the crisis is past.

From my perspective, this new tie-up with Sprint does seem to show that NQ can still sign up major new partners for its products despite the huge wave of negative publicity after the Muddy Waters attack. That could bode well for NQ's shares, which have slowly recouped some of their losses and now trade more than 70 per cent higher than their low point during the sell-off. I should also add that NQ shares still trade at around 50 per cent lower than pre-attack levels, though I do expect they will continue to recoup some of those losses unless new allegations emerge.

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