Reliance Jio Phone : the next "Power-House"

 

The Synopsis

Reliance launched their new Android-based smartphone in conjunction with Google last week, in case you missed it. Reliance is seeking to put a smartphone in the hands of every Indian with their Rs 6,499 smartphone.

But, you may wonder, why is Reliance entering into the smartphone sector. What's more, with Google as a partner?

To comprehend this, we must go back in time. Reliance Jio had just blitzed the telecom industry with its very cheap (practically free) voice and internet pricing in 2016. It was a stumbling block. India jumped from using 200 million GB of data per month to over 1 billion GB in only six months! It's been dubbed the "Jio effect."

Jio, on the other hand, has another card in its sleeve. Jio announced the JioPhone in the sub-Rs 2000 price bracket in 2017. It was a 4G-enabled feature phone with a slew of smart features including Facebook, YouTube, and JioTV access. In 2018, Reliance followed up with a somewhat more sophisticated feature phone that cost about Rs 3,000. Because the firm only possessed a 4G licence, the goal with both phones was to encourage 2G customers to switch. They hoped to persuade them to move to Jio.

And it worked in a way. In 2017, the country's feature phone users were at 500 million. Around 110 million of these consumers have signed up for Jio's 4G network by 2021. When you combine low-cost rates with a low-cost phone, you can create a little of magic.

Jio, on the other hand, is looking for more. It wants everyone to make the move, and it wants them to use the 4G network. As a result, its motto for a "2G-Mukt Bharat" (2G-free India) is "2G-Mukt Bharat"! And with JioPhone Next, it's hoping to persuade the 320 million people on Airtel's and Vi's 2G networks to do exactly that.

That, however, will not be simple. Especially when you consider the Rs. 6,499 price tag. Granted, since it's a smartphone, it's definitely a good deal, but $6,499 isn't cheap.

And when you consider what occurred with the first two JioPhone models, you can understand why this would be the case.

According to Counterpoint Research, the JioPhone's market share fell from 47 percent to 28 percent between 2018 and 2019. This isn't due to a lack of demand for feature phones. Cheaper phones from Samsung and Lava, on the other hand, started to enter the market around the same time.

JioPhone 2 had a same fate. JioPhone 2 accounted for less than 1% of total JioPhone shipments in 2019. Perhaps the price had something to do with it as well. After all, the typical rural Indian household only has a monthly excess of Rs 1,413. And if consumers weren't completely sold on the concept back then, it's possible that this new phone may suffer the same fate. Let us assume, however, that it does not. Let's imagine that people embrace this smartphone like never before, joining Reliance in proclaiming a "2G-mukt Bharat."

What does all of this mean for Reliance?

For starters, putting them into Jio's 4G network has clear advantages. If more customers buy a Jio sim, a constant stream of recurring money will be generated. Adding additional users may, in theory, give the telecom industry a fresh lease of life.

Then there's Jio Mart, Reliance's grocery-focused e-commerce portal that started in 2020. The idea was to link 3 crore Indian Kirana stores to their clients via a network of 200 cities. Furthermore, if more people migrate to Jio's 4G environment, JioMart may benefit. In truth, Reliance has plans to sell digital products via the JioMart network, including the "Next" phone.

So, only time will tell if Jio's target demographic would upgrade to a $6,500 smartphone. However, for the time being, the corporation seems to be rather optimistic about the entire thing.

(source: Finshots)