Considering to purchase a Jio Phone? Maybe you should wait for a while because a big bonanza is awaiting you. The smartphone makers and telecom companies are joining forces to develop a number of budget smartphones that will cost a fraction of currently available feature phones and come bundled with very attractive tariff plans. How attractive? Well, just Rs. 60-70 per month for a smartphone priced around Rs. 500! Yep – that’s what an Economic Times report suggests.
Believe it or not, but this is going to happen in a few days. To counter the JioPhone major telcos have come up with their own unique strategy. And the strategy is to convince smartphone makers to make ultra-affordable smartphones that cost less than the feature phones. Those cheap smartphones may then be coupled with highly affordable monthly tariff plans from a telecom company and launched in the market. Rather than building their own devices like Reliance Jio and then selling them at subsidized prices with their own tariff plans, other telcos believe that the business of building devices should be left to those who’re doing it already. So they’re just partnering with the smartphone makers to bundle the affordable smartphones with their aggressively priced tariff plans.
But how can a smartphone cost just Rs. 500?
However, you may be thinking right now that how is it possible to sell a smartphone for Rs. 500? Well, in the recent days a number of technologies have emerged which are making this possible. MediaTek and Spreadtrum have come up with a number of highly affordable 4G compatible chipsets that can be used in budget devices. Google has also made a dedicated version of Android dubbed Android Go for cheaper devices that may not have the kind of resources necessary to run the full-fledged Android OS.
These two things, when combined with economies of scale, can bring the cost of building a smartphone way below the present levels (around 1500 – 2000 INR). The smartphones may then be subsidized a little in partnership with telecom operators and offered at a price of around 500 – 1,000 INR with the bundled voice and data plans of telcos.
So as you can see, the devices will be subsidized… but the pain of subsidization will be distributed between telcos and smartphone makers evenly. Had telecom operators decided to go the Jio way, it would have cost them a lot.
In case you don’t know, Jio Phone costs INR 800 more than its market price to build. Other telcos, whose balance sheets are already strained due to Jio’s price war may not be able to sustain this burden.
What telecom operators have to gain?
In the short-term, nothing much. However, in the medium and long-term users of these smartphones may start consuming more data on their devices, which may help telecom operators in earning money from them. That’s what telcos are betting their money on.
The feature phone users account for 65% – 70% of India’s billion-plus mobile market, and they collectively contribute about 50% to the revenues of telecom companies. As you can see, they’re important enough for telcos to survive. No surprise why companies want to do anything possible to retain them.
In a nutshell, the mobile market is likely to get a number of super-affordable smartphones in the coming days with super-aggressive tariff plans. So if you were going to buy a Jio Phone or a cheap smartphone, you’ll be better off delaying your purchase for some time.