Reliance Industries is all set to capture the country’s smartphone industry. As per reports, it has asked local suppliers to accelerate their production capacity in India so they can make as many as 200 million smartphones over the next two years. For the country’s technology ambitions, this will act as a potentially enormous boost. Also, it would be a warning shot to competitors such as Xiaomi Corp.
It is also in talks with domestic assemblers to make a version of its Jio phone that would operate on Google’s Android and cost about 4,000 rupees ($54). The budget phones will be promoted with low-cost wireless plans from Reliance Jio.
Mukesh Ambani, Reliance Chairman, is looking to recreate the country’s smartphone industry much like he did in wireless services, where the low-cost prices and simple plans rapidly made him the leading force. The billionaire is also bringing into line himself with the Indian government’s ambitious plans to build more domestic manufacturing. This would work as a major boost for local assemblers like Lava International, Dixon Technologies India, and Karbonn Mobiles.
On Tuesday, Jio introduced various plans starting from as low as Rs 399. The plans not only offer just data but also subscriptions of OTT platforms Netflix and Amazon Prime. These are clear signs that Ambani is looking to boost his mobile campaign.
Aiming to sell 200 million phone
For Indian factories, Reliance’s aim of selling about 200 million phones over a time period of two years would signify a major boost. In the financial year 2019-20, India assembled an estimated 165 million smartphones and about the same number of basic feature phones. Approximately fifth of the smartphones cost less than 7,000 rupees, or about $100.
Bharti Airtel, another Indian telecom giant and Reliance competitor is also looking to assemble its own 4G device. On the other hand, Ambani is looking to outsource phone-making.
In July, Reliance signed a major alliance with Google, as a part of which the Alphabet Inc. unit would invest $4.5 billion and work together on technology initiatives. The agreement is still under monitoring review so for the time being Reliance is going ahead with the mobile phone initiative on its own.
Apart from this, Ambani has attracted over $20 billion in investments from U.S. Social Media giant Facebook Inc. for Jio Platforms Pvt, whose subsidiary Reliance Jio Infocomm Ltd. is placing the order.
On the prototype of phone, Reliance worked with assemblers for at least two years in secret. It is likely to bring a phone rapidly to market, however chances are it will miss the November Diwali shopping season.
Reliance could lift the prospects for Jio Platforms, if it succeeds in popularizing the new gadget. This would accelerate Ambani’s endeavors to build a kingdom spanning e-commerce, social media and games.
Golden chance to target half billion Indians
Many of Jio’s about 400 million customers use no-frills second-generation devices, giving $2 monthly for voice and data — a major prospective market for the new device. It could eat away the market share of Chinese phonemakers such as Xiaomi.
Jio has got a golden chance to target more than half billion Indians who don’t have a smartphone. With Reliance like to work with Indian vendors, Chinese brands will lose out on a probable opportunity and market share.
In its initial stage, Reliance’s requirements could soar to around 5 million gadgets per month, but no single Indian company for the time being has that kind of capacity so the order will get fragmented between numbers of assemblers. At least two local smartphone makers are in talks with the telecom giant.
In a country with an average GDP per capita of around $2,000, phones have become vital for gaining access to lite versions of apps from WhatsApp to YouTube. As per a report of Counterpoint, basic devices costing between $100 and $250 accounted for three-quarters of sales in the second quarter of 2020.
Reliance’s fourth-generation wireless gadgets are targeted at the approximately 350 million users of basic or feature phones that now control India’s industry.
The pandemic has compelled people to upgrade and have smartphones. For example, parents are meant to have a device for their kids so they can keep up with online lessons. As per UNICEF, there are about 250 million children between the ages of 6 and 16. If Reliance is successful in getting even 10% of this base to upgrade, Jio can become one of the prominent smartphone brands of 2021.