Market Insight

OPPO’s new R11 and R11 Plus will face difficulties to outperform its successful R9 series

July 14, 2017

Zaker Li Zaker Li Senior Analyst, Smartphone & Mobile

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On 10 June OPPO launched two new smartphone models, the R11 and R11 Plus, in Shenzhen.  The R-series is OPPO’s flagship range of devices. The new models replace the R9S series, which was launched in the latter part of 2016. Notable features include:

  • First devices to sport the new Qualcomm Snapdragon 660 processor.
  • 5.5 & 6.0 inch full HD Super AMOLED screen.
  • 4GB RAM+ 64GB ROM for the R11 and 6GB + 64GB ROM for R11 plus.
  • 20MP f/2.0 sensor in front-facing camera
  • Dual rear camera: a 16MP Sony IMX398 f/1.7 sensor and a 20MP Sony IMX350 f/2.6 sensor with telephoto lens.
  • VOOC quick charge whit 5V/4A.
  • Available price is 2999 RMB ($441.2) for the R11, 3699 RMB ($544.2) for the R11Plus.

Our analysis

OPPO is this fourth biggest smartphone brand in the world, and second biggest in the Chinese market, now with 109% year-on-year growth in 2016. So far this year, OPPO keeps growing, even as the Chinese market is nearing saturation. In Q1 2017 OPPO shipped 28.1Million smartphone globally, 67% growth quarter-on-quarter. OPPO has shown the strongest growth amongst all major brands in China. IHS Markit believes that the new OPPO R11 devices will have good shipment volume, but will not surpass shipments of the R9-series, which surpassed 20 Million. Key factors will drive the success of the new devices:

Increased marketing resources for R11

OPPO has been successful because of its effective combination of marketing and distribution channel availability – especially the company’s distribution infrastructure is a key differentiator in China. With the release of the R11, OPPO is changing its strategy. Seventeen popstars were invited to a televised launch event broadcast by ZJTV, which is a famous about TV show maker in China. IHS Markit believes that OPPO is increasing marketing activity surrounding the launch to position the device in an increasingly saturated market, because the device lacks clear innovative hardware differentiators.

Exclusive chipset for two months

The R11/Plus are the first devices to sport the new Snapdragon 660 processor. The chip has an optimized image processor, developed in corporation with Qualcomm. OPPO and Qualcomm signed an exclusivity agreement for two months for the Snapdragon 660 processor. The first few months after launch are crucial for the success of any handset and OPPO is a good position to benefit from their exclusivity period. However, the Snapdragon 660 processor is a mid-range chip, and the competition is likewise addressing the mid-range market segment with focus. OPPO needs to focus on delivering the new devices to its distribution channel quickly, otherwise any potential advantage is lost.

Fierce competition and short life cycle

The need for focused execution becomes clear with an eye on the competition. Xiaomi’s Mi6 and Huawei’s Nova2 compete directly with OPPO.  Although the R11 and R11 Plus features upgrades to the R9s and R9s, competitors also have updated their newer devices. The price of the R11 is 200RMB higher than R9s and the R11Plus is 400 RMB than the R9S Plus. IHS Markit believes that the higher price will hold back some potential buyers, especially considering the lack of outstanding new hardware. The R11 life cycle might also be shorter than previous series, since the new device does not include the latest trend in displays: a taller display with screen aspect ratio of 18:9, and all-screen front. OPPO has to start shifting priorities to devices which will integrate these types of new display, if the company wants to release them this year.

OPPO focuses consumers’ likes and needs as it central marketing positioning strategy. This has meant a focus on camera technology - from the earliest model, the Ulike2 equipped with two megapixel front camera and five megapixel rear camera to the R11 now. This is an easy way to build a specific brand image. IHS Markit believes that if OPPO wants to make the jump to be one of the leading smartphone brands, focusing on the camera is not enough. OPPO also needs to embrace other leading mobile technologies, like advanced displays, to retain its position or expand its market share globally.

Geography
China
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