JioPhone’s tepid returns drive shift in strategy
2 min read . Updated: 17 Jul 2020, 06:46 AM IST
Premium- The response from budget users was less than enthusiastic for the JioPhone, which fell short of expectations in a rapidly expanding telecom market
- JioPhone had helped drive up the subscriber base, but failed to help the operator find premium data subscribers
Reliance Jio’s move to jointly develop a low-cost smartphone with Google heralds a marked shift in strategy three years after the ambitious launch of JioPhone, the feature phone offering a gamut of services.
The response from budget users was less than enthusiastic for the JioPhone, which fell short of expectations in a rapidly expanding telecom market flooded with smartphones from China, analysts said.
JioPhone had helped drive up the subscriber base, but failed to help the operator find premium data subscribers to the extent that it was now looking to woo them with Google’s help, experts suggested.
The first JioPhone was launched by Mukesh Ambani at the 40th Reliance annual general meeting in 2017 at an “effective" price of ₹0, for which the buyers had to pay ₹1,500 first. This was followed by JioPhone 2 a year later priced at ₹2,999. Last year, the price was cut to ₹699 as part of a Diwali offer. An estimated 120 million of Jio’s 388 million subscribers are on JioPhones.
The phones were launched to woo low-budget 2G subscribers from rival networks to Jio. Bharti Airtel and Vodafone Idea had 48-60% subscribers on 2G networks as of March. Analysts said if 2G users migrated to the new phone by Jio and Google, it will not only help increase the subscriber base for RIL, but will also increase average revenue per user. However, a rapidly saturating feature phone market is just one stumbling block.
“JioPhone was a feature phone with some features of a smartphone, but it does give the same smartphone experience. Besides, users always want high-end phones. Today, feature phone sales are coming down and my sense is JioPhones are not in supply," said the managing director of a mobile retail chain.
JioPhones are exclusively retailed through Reliance Retail and the sales figures are not publicly available.
The feature phone offering has been dragging down telecom revenue growth for Jio and adding smartphone data users will rapidly change the dynamics. JioPhone users are largely on the basic ₹75-125 range, whereas data users on rival networks have to start at significantly higher ticket sizes for the same experience.
Jio aims to enter a market where users don’t want to upgrade due to a lack of good quality smartphone in the sub-$50 range and are also hampered by their ability to navigate the digital ecosystem effectively, said Tarun Pathak, associate director, Counterpoint Research.
“ Semiconductor companies Qualcomm and Intel are on board now. Jio has been offering data services and hardware for sometime and, with Android, now they have the opportunity to convert millions of 2G users to data consumers across a connected ecosystem," added Pathak.
