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The cheap and effective Jio smartphone, to be powered on Google's Android platform, could be the gamechanger that a 5G hungry Indian telecommunications industry is waiting for as a huge market segment waits to be fed.
It would cost just $54 for India to enter into the hitherto unchartered realms of 4G or 5G thus changing the face of Indian telecommunications forever. The credit for this should perhaps be attributed to Reliance Chairman Mukesh Ambani as the brains trust in his company work at a feverish pace with domestic assemblers to put together a version of the Jio smartphone that is slated to be powered on Google's Android platform and cost approximately Rs. 4,000 ($54).
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The delivery of the phones could probably miss the markets by the festive season of Diwali but it could well a merry Christmas, or a happy new year, as they are set to hit outlets early next year. The smartphones will be armed with low-cost wireless plans from Reliance Jio, the parent company's carrier.
Ambani knows all about the benefits of hitting the right price points and cornering off a significant section of the market and to this end his company has outsourced the manufacturing and sales of 150-200 million phones over two years thus presenting local manufacturing with a huge opportunity to expound on the tenets of Atmanirbhar Bharat. The delivery of the phones could probably miss the markets by the festive season of Diwali but it could well a merry Christmas, or a happy new year, as they are set to hit outlets early next year.
The smartphones will be armed with low-cost wireless plans from Reliance Jio, the parent company's carrier.
As Ambani said at Reliance's 43rd Annual General meeting when entering into a deal with Google, “Google and Jio are partnering to build an operating system that could power a value-engineered, entry-level 4G/5G smartphone. The Jio-Google partnership is determined to make India 2G-mukt (free). Google's CEO Sundar Pichai was equally to endorse the blueprint saying, “Everyone should have access to the internet. Proud to partner with Reliance Jio to increase access for the hundreds of millions in India who don't own a smartphone with our 1st investment of $4.5B from the Google For India Digitization Fund.”
Reliance's partnership with Google is currently under regulatory review and the former is proceeding with the mobile phone initiative on its own for now.
The introduction of 4G/5G phone into the Indian ecosystem is destined to be a game changer not just for the consumers but for the telecommunications platform as well. A win for Reliance and a brag for local manufacturers - like Dixon Technologies India, Lava International and Karbonn Mobiles to name a few - who will have showcased their skills to the world thus attracting more FDI and boosting up the manufacturing sector.
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The smartphone sector in India is currently on steroids and is overperforming across many verticals. India had assembled an estimated 165 million smartphones in the year ended March, and about an equal number of basic feature phones. About a fifth of the smartphones cost less than $100 (Rs. 7,000). Not willing to be left out of the party the competition like Bharti Airtel, Reliance's arch rival have also started doing their homework and consulting assemblers in a bid to set up their own 4G network.
Jio alone has a target market of half a billion Indians at its disposal - they are the ones who do not own a smartphone and thus it's a blue ocean opportunity that presents itself. This also effectively puts the barriers on Chinese brands from entering into the market.
Jio alone has a target market of half a billion Indians at its disposal - they are the ones who do not own a smartphone and thus it's a blue ocean opportunity that presents itself. This also effectively puts the barriers on Chinese brands from entering into the market and obtaining a portion of the share. Given the volume of inventory that is presented Reliance will be forced to break up the orders between multiple assemblers since no domestic company has the capacity to produce around 5 million gadgets per month which is Reliance's requirement.
Google and Jio are partnering to build an operating system that could power a value-engineered, entry-level 4G/5G smartphone. The Jio-Google partnership is determined to make India 2G-mukt (free). Mukesh Ambani
As Ambani reiterated publicly, most customers in India are trapped in the bubble of 2G. The demand for features on a phone has skyrocketed - apps from WhatsApp, YouTube are essential - and these are expected requirements from the middle class in a country where the average GDP per capita is around $2,000. By this yardstick the data confirms that basic devices costing around $100-250 accounted for three-quarter of the sales in the second quarter of 2020. The price outlined by Ambani for the Reliance smartphone ($54) could shatter all sales predictions within its market segment.
This is not to say there will not be competition. According to a report by Reuters three of Apple Inc′s top contract manufacturers plan to invest a total of almost $900 million in India in the next five years to tap into a new production-linked incentive plan, according to two sources familiar with the matter. Foxconn all plan to make investments under the scheme, said unnamed sources.
India′s new $6.65 billion production-linked incentive (PLI) scheme offers companies cash incentives on any increase in sales of locally-made smartphones over the next five years, compared with 2019-20 levels. The scheme aims to help transform India into an export manufacturing hub.
Foxconn has applied to invest about $542 million (40 billion rupees), while Wistron and Pegatron have committed to invest close to 13 billion rupees and 12 billion rupees, respectively, under the PLI plan, the sources said.
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It is unclear whether all of the investment will be targeted at boosting manufacturing of Apple devices in India, but the sources and industry insiders said the vast majority would be focused on expanding iPhone manufacturing in the country.
According to Reuters While Foxconn, Pegatron and Wistron make devices for companies other than Apple globally, Wistron′s arm in India currently assembles only iPhones.
Wistron, which assembles roughly 200,000 second-generation iPhone SEs per month in India, plans to scale that up to 400,000 a month by the end of the year, one of the sources said, as it looks to cater to export demand for the device. That plan is expected to create roughly 10,000 jobs. Pegatron is yet to start Indian operations, but has been in talks with several states, with Tamil Nadu in the south emerging as a frontrunner for a planned plant to manufacture Apple devices.
Local manufacturing helps Apple save costly duties levied on imports of fully-built phones and components in India, where the Cupertino, California-headquartered tech giant accounts for just 1% of smartphone shipments. Apple is looking to change that. It launched its online store in India last week, and is building its first company-run retail store in the financial hub of Mumbai.
In strong contention for market share is Korean smartphone giant Samsung Electronics Co Ltd which is expanding its online-only smartphone range in a bid to enhance sales and woo new customers during the festive season.
Reuters reported that Samsung will launch the new India-made Galaxy F range of smartphones at Walmart Inc-controlled online retailer Flipkart on Oct. 8, Asim Warsi, a Senior Vice President and Head of e-commerce Business at Samsung India, confirmed the news as well saying, "The series is aimed to address the burgeoning demand among the young online shoppers in India.” Indian customers make big-ticket purchases in the holiday season, which commences around October and lasts until the end of the year. According to Warsi, "Samsung is building up for a very buoyant and a very strong festive sales period this year and by virtue of that our exit market share in the overall online space would be in excess of 30% at the turn of the year.” The F series, smartphone is priced between $200 to $250 and will only be sold online through Flipkart and Samsung's own website.
Reliance has chalked out its own path and for this it has found backers from some of the world's top blue chip entities as India forces a toe hold into the world of 5G. The pandemic has changed the way business is being done and upgrades in tech are leading to further market opportunities being created. Cheap and cheerful can also work and here's another reason why - more and more kids are getting access to smartphones given the focus on online education. According to UNICEF an estimated 250 million children ranging from the age of 6-16 will charter an online path to education. If Jio can get access to even 10 percent of this number to upgrade to a 4G/5G enabled $54 smartphone then it all makes perfect business sense as they would be poised to become one of the leading smartphone brands by 2021.