NEW DELHI: The recent start of pre-booking for Reliance Jio's much-touted 4G feature phone—JioPhone—is another disruptive ploy of Mukesh Ambani-owned company. Reliance Jio's stormy entry into $26 billion Indian telecom market riding on big freebies last year changed rules of the game. With its second wave of disruption, it might end up leading the game.
After a speedy start, Jio has seen a slowdown in the pace of its customer acquisition, mainly due to the limited number of affordable 4G handsets in the market. But JioPhone can help the new operator target millions of 2G feature phone users who have been wary of shifting to smartphones due to the affordability factor and lack of use case.
JioPhone, a 4G feature phone which will be available at an effective cost of Rs 0, can rattle the existing players who can lose a big chunk of their low-end voice customers. It will hit low-end handset makers as well.
Currently, over 60 per cent of India's roughly 750 million mobile users use phones that allow only calls and basic texts, making so-called feature phones the country's single largest segment, according to a Reuters report. The JioPhone will create a new phone segment aimed at millions of low-paid Indians, currently caught between basic, calls-and-text devices and fancier smartphones.
The incumbents are already firming up their strategies to take on the JioPhone disruption.
India's biggest mobile phone company Bharti Airtel is in advanced talks with handset makers to introduce a 4G smartphone in the lead up to Diwali for about Rs 2,500, bundling large amounts of data and voice minutes with the device to take the battle to Reliance Jio for retaining a share of the mass market.
Vodafone India has bundled voice plans and cashback with 2G feature phones from China's itel in a first-of-its-kind deal for India's No. 2 telco. It is striving to ringfence its voice-only user base from migrating to the Reliance Jio Infocomm-backed 4G feature phone, pre-bookings for which started on Thursday.
Vodafone will offer talk time worth Rs 50 free for 18 months for consumers who buy one of 17 models priced between Rs 800 and Rs 1,600, being offered by the No 2 feature phone brand in the country, with a bid to protect its voice business, which still contributes around 80% of revenue, according to analysts.
Apart from the strategy of rivals, JioPhone faces many challenges on its way to conquer the market.
A JP Morgan report says JioPhone might not withstand consumer expectations and wouldn't halt potential feature phone users' plans to own a smartphone during a three-year lock-in period. Smartphone penetration for Airtel and Idea has crossed 40% of their subscriber base even as a significant part of them are not broadband (3G/4G) users yet. The low-end of this smartphone user base operates at clear sub-Rs 200 ARPU (average revenue per user) and consumers would likely to consider the pros and cons of downtrading to JioPhone from a smartphone.
Another big challenge for JioPhone is that it is without WhatsApp, a big attraction for users who want to shift to smartphones. Ambani is reportedly in talks with the engineers of WhatsApp for a light-mode version of the popular messaging app for JioPhone. However, there are reports that JioPhone is not likely to get the messaging app anytime soon.
With more than 200 million active daily users in India and more than a billion worldwide, WhatsApp's absence could make JioPhone less attractive. Idea and Intex are already working on affordable Android-based smart feature phones that can support Facebook and WhatsApp.
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