The move will allow Oppo to consolidate its efforts while pushing further into the high-end smartphone space. It will give OnePlus more resources to move ahead in the global market. OxygenOS is likely to be the bridge between their hardware ecosystems.

OnePlus CEO Pete Lau, who returned to Oppo to oversee product development a few months ago, announced in his blog that OnePlus will be integrated into Oppo. It is a significant turning point for both brands’ strategies.

Competition in the high-end segment and globalization among Chinese vendors is becoming exceptionally intense. Oppo set its ambitions on capturing share in the high-end segment in developed markets, while OnePlus looked to grow in the budget segment. But the two are now finding themselves increasingly competing against each other in more markets and consumer segments. This wasn’t the plan when Oppo decided to spin-off its elite team to establish the high-end OnePlus brand seven years ago.

Apart from a more concerted high-end strategy for Oppo, Canalys believes that consolidation of resources is another key motivation for Oppo to bring OnePlus closer. As costs for hardware vendors are rising quickly, improvements in operational efficiency are much needed. As highlighted by Lau in his announcement, key words such as “shared resources”, “efficient” and “fast” reveal the profit pressures that hardware vendors are currently under, especially smaller companies. This is not only an issue on the hardware side. OnePlus adopted Oppo’s ColorOS on its 9 series in China backed in March.

The official merger of OnePlus and Oppo will have a positive impact on their ecosystem growth, as more synergies can be created through OxygenOS, not only on smartphones but also in IoT products.