New Jio Phone could be a game changer in the price sensitive Indian market

By Muqbil Ahmar | First Published Sep 28, 2017, 6:59 PM IST

Touted as “India ka smartphone,” due to its low price, it is essentially a basic phone with a good internet access.
There is nothing cheaper than that this in the market. And Indian consumers are price sensitive.
People don’t need to buy a phone—the phone comes free with the service. With this new model, that gap stands closed.

Never before has anticipation reached such colossal levels for a phone’s entry. Perhaps, coming second only to the utterly fantastic Freedom 251 Phone, which made domestic as well as global headlines. The new Reliance Jio Phone promises to cater to a high-volume mass market of handsets, offering high-speed Internet and features at unimaginable prices. It would definitely not burn a hole in your pocket.

Touted as “India ka smartphone,” due to its low price, it is essentially a basic phone with a good internet access. At this price, it is definitely worth a look. From the look of it, it seems that Reliance is confident about the superiority of its product as it is literally being given away free of cost. Though there is a Rs. 1500 deposit for buyers, it has the "effective price tag of Rs.0” as the deposit is refundable after three years. Moreover, it comes bundled with the Jio bouquet of unlimited voice, data, and SMS at a nominal fee of Rs 153 per month. What more could have one asked for? Reportedly, deliveries have started and are scheduled to be completed by Diwali for the 6 million people who have booked it.

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Reliance Jio is trying a new business model

Jio will be the first mover in this business model. It thrives overseas but no telecom player in India has tried this revenue model before. In foreign countries, it is a common phenomenon. A phone comes bundled with the service. People don’t need to buy a phone—the phone comes free with the service. With this new model, that gap stands closed.

Consumer expectations may escalate. The new phone could turn out to be really disruptive in the sense that a common buyer may expect a free phone every time they subscribe for a new service. This could prove to be a headache for other telecom players, who are already faced with increasingly nose-diving margins and bottom lines.

Is the new JioPhone worth the price?

Absolutely! There is nothing cheaper than that this in the market. And Indian consumers are price sensitive. Moreover, the phone was always in the making right from the time when the Jio juggernaut started rolling. When the free offer started a year back, Reliance must have known that many customers will not switch to it as the offer entailed buying a new smartphone that was Volte enabled. In fact, there were several smartphone handsets which were not compatible with the service. To remedy the situation, Reliance came out with a detachable device for incompatible phones. But that strategy doesn’t seem to have worked. Even if it had, this phone had to come.

The phone is aimed at tapping into the roughly 50 crore feature phone users who weren’t been able to switch to the Jio 4G network before. The Jio Phone is a necessity for Reliance since its entire network is based on 4G VoLTE. It is not 2G or 3G as other players have.

Will the new JioPhone be a game changer for the industry?

This is a question to which there are no easy answers. The Jio subscriber base has not really taken off in the way it was predicted. Not everything that is free works. If price were the only determining factor, Tata Nano would have never been taken off the shelf and would have made history. So, there are several other variables in the equation, including the finance and revenue models, along with a sound business model and last but not the least, the new-age highly-demanding consumer whose aspirations keep on increasing like anything.

The device can be sustainable and profitable for the users only if they like it. As always, it is the most difficult proposition to please the millennial who hold the purse strings. This offering could cultivate some new consumer habits apart from the usual ones and could add some new use cases for a typical feature phone user like a torch or FM. However, to me, I don’t think it will have a radically disruptive effect on the segment that would result in a mass movement, unlike the previous shift to the smartphone, where the share of 4G devices shifted from 11 to 65% in just one year. It will be difficult to surpass that magic.

But is this the freedom that India always wanted? Point is digital transformation is on us whether we like it or not. It is upon us and there is no escaping from it. Therefore, every meaning of freedom or emancipation will have to be found within the contours of this digital framework.

About the Author

Muqbil Ahmar is a tech evangelist, environmentalist, women's rights advocate, and columnist. He is also the founder of Greenubuntu. You can connect with him at @muqbil_ahmar.

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