Will the Jio-Google Smartphone gamble pay off?
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The mobile handset, for most Indians is the primary, and most often, the sole means of accessing Internet. As a nation, India leapfrogged into the digital economy by embracing the mobile phone. In fact, no other nation has embraced mobile the way India has. The 2G feature phone market in India is very much alive, and accounts for close to 50% of the entire universe of mobile users in India. On the flip side, this also translates into a significant headroom for smartphone brands to grow, especially at the bottom of the pyramid.
This is the vacuum that Jio aims to fill with Google. The partnership aims to build affordable 4G and 5G phones in the near future and powered by an Android operating system (OS). In doing so, Jio would look at furthering India’s digital transformation, bringing more Indians into the digital economy.
Thus far, a key challenge for the smartphone market in India to grow has been the inability to offer value propositions that will help feature phone users to migrate to smartphones. Going by Jio’s legacy, the focus would be on delivering a feature-rich, affordable smartphone that comes bundled up with services from within the overall Jio Platforms and does not just ride on the features and specifications. Such a phone has the potential to hack and fuel growth in the entry-level smartphone market.
The affordable smartphone segment is one of the largest in India accounting for close to 75 percent of the market and it is driven by Chinese phone makers primarily. The Jio- Google alliance will emerge as a potential threat. Offering devices at cutthroat prices with better specifications and bundled up with data will be a complete package for the existing Jio phone users to upgrade to.
There are very few smartphone brands which have tasted success in the < INR 5K price segment.
As per insights gleaned from the CMR India Mobile Handset Report, around 3% of the overall feature phones shipped in the last quarters are in the price range of INR 2-4K. This is the target audience that Jio will aim to attract and enabling feature phone to smartphone migration.
However, it will be a challenge to debut a smartphone in the INR 2K – 4K price band with decent features.On the other hand, to make feature phone users from below INR 2k category to switch to smartphones will be a herculean task. Majority of consumers in this segment are very badly hit due to COVID-19. Moreover, content consumption has gone up in COVID – 19, which can be an important factor for smartphone users to look for this option as their new smartphone will be bundled up with content also. Price differentiation in comparison to other brands operating in the market has also role to play in actual purchase of new smartphone.
The Jio Google phones could be optimized for the Jio network and come bundled with the various offerings within the Jio Platforms – cutting across health, education, and entertainment.
All said, both Jio and Google have failed in the past with their individual initiatives to win the entry-level smartphone segment. By combining forces, they could be in a better position to be positioned for potential success.