Why JioPhone is bad news for Indian smartphone industry

Why JioPhone is bad news for Indian smartphone industry

In November 2016, Reliance Jio shook up the telecom industry when its founder, Mukesh Ambani announced to the world plans of introducing an ultra-affordable smart feature phone for the almost 50 crore 2G users in the country. Talking about his vision, he had explained that Jio was planning to introduce a feature phone with 4G capabilities for as little as Rs 1,000.

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Later, reports suggested that the phone could make it to the market with a price tag of Rs 500. But as it turns out, upon its eventual release, Mukesh Ambani-led Reliance Jio proved such reports wrong and created ripples in the telecom sector after it announced the JioPhone “effectively free” on July 21, 2017.

Shortly after, the phone went up for pre-booking and the first batch of the device started to roll out sometime in October 2017 at a refundable deposit of Rs 1,500. Since demand was high, availability remained a problem for Jio until the end of the year.

However, if the findings of the latest research by Counterpointis anything to go by, the company has left such woes behind and in the first quarter of 2018 notched up impressive sales figures which could pose a problem or two for major smartphone makers in India. In the process, it has also helped the Indian mobile phone industry expand at an impressive pace of 48 per cent from the figures it posted the same time last year.

Feature phone market doubles

As per the report, during the period India’s feature phone market also doubled from a year ago. This was largely due to the efforts of JioPhone, which helped the company capture over a third of the total feature phone market – the highest ever in a single quarter.

As Tarun Pathak, associate director at Counterpoint explains, “The demand for JioPhone continued through Q1 2018 as Reliance Jio’s feature phone market share raced from 0 per cent last year to 36 per cent in Q1 2018. This demand was catalysed by the introduction of a cheaper data plan, for the JioPhone in January: Rs 49 per month including unlimited voice calling and 1GB of data per month. Additionally, Jio has been aggressively promoting JioPhone as ‘India’s free smartphone’ though technically, a smart feature phone to attract the large base of 2G voice users which prefer the simpler feature phone form-factor. Further, the lack of vernacular/regional content, UI and good quality smartphones below Rs 2,700  has been some of the driving factors for JioPhone’s growth.”

With smartphone-like tricks up its sleeve, the JioPhone also forced other low-end feature phone manufacturers like Micromax, Lava and Intex into going back to the drawing board to create products that can match the Jio Phone’s features at a comparable price.

This further helped competition grow and fueled the growth in the market.

Smartphone segment remains flat

However, this tremendous growth in the feature phone segment came at the cost of growth in the smartphone market. In what would come as surprising news for many, smartphone sales in the country between Q1 2017 and Q1 2018, showed no growth.

However, despite the market not growing overall, it turned out to be a good year for Chinese brands which recorded their highest ever contribution to the Indian smartphone market as Chinese brands accounted for 57 per cent of the total smartphone market sales – up from 53 per cent during Q1 2017.

Xiaomi remained at the front of the pack with a 31 per cent market share followed by Samsung (26 per cent), Vivo ( per cent), OPPO (6 per cent), and Honor ( 3 per cent). The report further adds that Honor (146 per cent), Xiaomi (134 per cent) and OnePlus (112 per cent) were the fastest growing smartphone brands in Q1 2018.

Performance in the premium segment too – phones above Rs 30,000 – remained flat during Q1 2018. As per the report, Samsung proved to be the winner here capturing half of the total premium market on the back of the sales of the S9, S9 Plus and A8 Plus. Second, in the list, is OnePlus which “maintained the second position with one-fourth share of the total premium smartphone market.”

 

Source by www.msn..

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