Investing in Nothing is a big gamble

We’re new. We’re disruptive. And we’re going to make the consumer tech industry less boring. These are some of the claims that Nothing made during its highly-anticipated event last month. A brainchild of OnePlus co-founder Carl Pei, Nothing aims to disrupt the industry with its upcoming smartphone after launching a pair of noise-canceling earbuds last year.

The hype is real. Folks that have followed OnePlus’ journey over the years are familiar with Pei’s marketing tricks and business acumen. And that also explains why Nothing has also managed to rope in some big-name backers, which include familiar faces such as influencer Casey Neistat, Reddit CEO and co-founder Steve Huffman, Twitch co-founder Kevin Lin, and Web Summit founder Paddy Cosgrave. Even Google wants a piece of Pei’s Pie.

We want everyone to play a part in Nothing.

As a community-guided company, everyone deserves a chance to share in any potential success.

Not in a few of years or if we go public. But now, as our ecosystem begins with phone (1). pic.twitter.com/229m4oyTyG

— Nothing (@nothing) April 3, 2022

In fact, the company raised $70 million merely days before its event when it announced plans to launch a phone, the Nothing Phone 1. “We are picking fights with trillion-dollar companies,” Pei said. And just in case there was any doubt, the company in question happens to be Apple. More importantly, Nothing doesn’t just aim to unsettle the iPhones but wants to create an ecosystem that can rival the famed walled garden itself. “We’re building the most compelling alternative to Apple,” Pei proclaimed during Nothing’s The Truth event.

Now, I am neither an investor nor do I masquerade as one on a local TV show. But as someone who has been following the consumer tech industry’s development for the past decade, I would be skeptical of investing in Pei’s company. Yes, I’d love to see a less-boring phone with an industry-rattling set of tricks, complemented by a robust ecosystem of gadgets with neat interoperability features, but it’s hard to buy into it all.

The phone dreams aren’t really rosy

Let’s be clear; the Nothing Phone 1 is the product that can make or break Nothing’s grand ambitions. The company hasn’t given us a glimpse of the upcoming device and is also too shy to talk about the specs before summer. But the industry is not the same as it was when Pei started his journey with OnePlus, championing its never settle motto.

Let’s start with the self-professed rival. Apple’s market position is stronger than ever, and its products now target a user demographic at almost every price point between $429 to over a thousand dollars. The U.S. would be a tough market to crack for Nothing without a robust carrier partnership plan. Upending Samsung with all its aggressive offers and lucrative discounts would be another huge challenge.

Then comes the OnePlus problem. Yes, OnePlus isn’t the same company that it used to be a few years ago, and the hype has withered to a healthy extent. But OnePlus still commands a loyal fanbase despite climbing the price ladder for its flagships. Plus, the budget Nord series has kept it anchored to its roots and the strategy is paying off. From a business perspective though, OnePlus is actually in a stronger position than ever, thanks to the tight integration of its supply chain and development res with Oppo.

All the brands operating under the aegis of China’s BBK Electronics — Oppo, OnePlus, Vivo, and Realme — have a huge pool of cash at their disposal to burn, for everything from marketing to research and development. And it is actually translating to solid products and meaningful tricks like superfast 150W charging. And believe me, you have to experience that blazing-fast charging to realize that it’s a feature you never knew you wanted in the first place.

Little space for standing out

Pei talks about innovation, and we’d love to see him deliver a phone that can truly leave a mark. But the meaning of smartphone innovation has actually taken a different course in the past few years. But let’s not get too far ahead in the future of expensive foldable phones. There are four key hardware areas where a phone innovation can make a practical impression — display, speed, cameras, and battery.

Xiaomi, Apple, Samsung, and Oppo, all engage in a royal rumble for display superiority with every single flagship they launch. And they actually deliver, but it is hard to actually call one of them inferior to the other in terms of discernible quality. Nothing is going to use the same Snapdragon processor as all of its rivals, so don’t expect any edge in the performance department either.

In terms of cameras, Apple, Samsung, and its Chinese rivals have years of experience hogging the best sensors and tuning the software to deliver terrific results. Apple is currently sitting at the top, and even the likes of Google with its famed Pixel pedigree and all its software-backed computational photography expertise, are now finding it hard to topple Apple at its camera game. Yet again, there’s little scope for Nothing to offer something extraordinary here, be it in terms of raw quality, or sheer camera wizardry.

As far as battery tricks go, Apple and Samsung are definitely far behind the competition. Xiaomi has already pumped phones with 120W charging into the market, some of which cost as low as $300. The race for 150W has already begun, while 200W tech might well debut by the end of this year. Even if Nothing Phone 1 puts crazy fast charging wizardry in its arsenal, it won’t really stand out.

Maybe Nothing Phone 1 can combine all the best goodies and deliver a balanced phone? That’s great, but it’s also complacency, and not really a “less boring” phone that Pei is selling the vision of. Nothing is touting the Nothing OS as a differentiating factor, promising a clean Android experience where every byte is accounted for. For now, it looks more like a clean Android skin with some minimalist aesthetic makeover and a few tricks such as Tesla app integration.

Too much trust in software

The full extent of Nothing OS’ unique traits is still a mystery, but I doubt it can replicate the same experience as OnePlus once offered with Cyanogen, and later with Oxygen OS. OnePlus won loyal fans with the customizability aspect of its software and how it closely worked with its community to keep polishing the experience. Nothing doesn’t command that yet, even though it plans to build a closely-knit community feedback system that will even surpass the company-customer intimacy that OnePlus offered.

Pei has promised three years of OS upgrades and four years of software updates for the Nothing Phone 1. That is already a few years short of what iPhones offer, the product Pei aims to surpass. Samsung has already upped the ante with four years of OS upgrades and five years of security updates for its flagships and is even extending the courtesy to mid-range phones.

Objectively speaking, nothing that Pei has promised so far instills much faith in the Phone 1 and its ability to stand out from the crowd. Maybe, the rumored transparent design elements inspired by the Ear (1) earbuds will grab some eyeballs, but aesthetics can only take you so far. Pei wants to build an ecosystem of products that will talk to each other and the Phone 1 will serve as the anchor, but that ecosystem doesn’t exist just yet.

I’ll probably wait for the fireworks

Even those who buy into Pei’s vision will have to wait for a year, or two, for those ecosystem products to launch in order to take advantage of those connected features. Xiaomi took years to master its formula of blending Corporate Venture Capital (CVC) and ecosystem investment business models but still hasn’t left a global mark with its ecosystem of products that bear a distinct Xiaomi flavor, especially in the western markets. Nothing has far fewer res, expertise, and experience to execute a product ecosystem strategy in its first swing.

Another (1): coming… never.

Jokes aside, it’s easy to follow everyone else, yet that’s not who we are.

But phone (1) is coming, and it really is like nothing else.

Summer 2022.

Get notified: https://t.co/pLWW07l8G7 pic.twitter.com/N4OMvf03B5

— Nothing (@nothing) April 2, 2022

At this point in time, Pei has generated more hype around Nothing than seems deliverable. A shrewd marketing campaign can only go as far, but building an ecosystem requires willing industry collaborators who are supposed to overlook rivals with deeper pockets and better reputations to help a newbie like Nothing rise up from nothing and look straight into the eyes of trillion-dollar companies. That’s a lot of faith to put into a company with only a charismatic leader at the helm and a non-existent phone on its agenda of industry dominance.

“We hope, that the Nothing Phone (1) is the wakeup call that the industry needs,” Pei claims. “We’re not saying we’re gonna fix the industry with just one product, but we want the Phone (1) to mark the start of change.” I’d wait until I see that catalyst of change this summer before I dump all my change — or none of it — into Nothing’s investment jar.

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