UK-based startup Nothing’s sub-brand CMF has launched its second smartphone in India — the CMF Phone 2 Pro — less than a year after introducing the CMF Phone 1 in July 2024. Targeting the price-conscious youth in the under ₹20,000 segment, CMF’s first offering stood out with its fresh design and premium NothingOS experience.
At the global launch event in New Delhi, Nothing CEO Carl Pei — best known for co-founding OnePlus — outlined a strategy focused around software features to excite users instead of hardware specifications. Interestingly, Pei wants to ban the use of the word “AI” in his startup and “play it safe”, given the market uncertainties. Here are key excerpts from a quick conversation Carl Pei had with HT Tech:
Q: How has the Indian market responded to the CMF line of products so far?
India is one of the toughest markets in the world, largely because consumers are highly demanding — they scrutinise every detail and expect maximum value. As a startup, this makes it even more challenging for us. Unlike larger players like Samsung, which ships over 200 million phones annually, or Chinese brands with 100–150 million units, we operate at a much smaller scale, in the low single-digit millions. This scale difference creates a significant cost gap when negotiating with suppliers. Yet, we must still meet the expectations of highly price-sensitive Indian consumers, which makes the task even more demanding.
Also read: CMF Phone 2 Pro launched in India with slimmer design, sharper price
Q: Mobiles under the ₹20,000 segment are quite competitive. Consumers now expect fresh designs every six months. Are you genuinely able to protect your profit margins while meeting these aggressive expectations?
The margins are definitely not enough for now, but growth is our immediate priority. As volumes scale, supplier costs are falling, improving our price efficiency. By building scale, we aim to restore margins through supply chain leverage — and only then will we explore additional paths to profitability.
Q: Given the current margin pressures, will CMF by Nothing be forced to raise prices, or is a move into the premium smartphone segment now inevitable to sustain the business?
Our primary focus is on driving volume, and to achieve that, we must stay price competitive. Raising prices would directly conflict with our growth strategy. In India, consumers have far more choices — typically evaluating nine different brands before making a purchase, compared to just two or three in markets like the UK. The competitive intensity here is on another level. For now, our strategy is clear: focus on volume growth without altering the price-value equation.”
Q: How confident are you that CMF by Nothing can keep innovating without eventually running out of fresh ideas to excite consumers?
We’ve been super practical about the way we run this business. Because, as you can imagine, it costs a lot of money in engineering to develop each new product. So then every product we launch has to be a hit. We are quite conservative in the innovation that we bring to the market over time. As the volumes grow and as the margins grow, that’s when we can dare to be more innovative in our product approach.
Innovation in smartphones will mostly be on the software front for us. In the smartphone hardware space (spec sheet), we still have to play it safe. We reached 1% market share, but we’re the smallest, so we have to play it safe, do more innovation on the software.
So internally, we’re also decoupling the hardware from the software. Whenever we launch a new phone, Nothing OS is also upgraded with a couple of extra features to support that phone launch.
Q: With software in focus, what about getting more AI features in smartphones?
To begin with, AI is a big buzzword. I almost want to ban AI as a word in the company, because most brands, I think, use it incorrectly. I think AI is just a tool, just the ingredients to try and solve a user’s need. AI is not the end in itself, but I think most brands are just using the word AI for marketing- AI, camera. AI this and AI that. ‘AI everything’ is not our approach on the software side.
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