Reliance bets on JioPhone to build smartphone ‘middle class’
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Reliance bets on JioPhone to build smartphone ‘middle class’

RELIANCE has bet big on smartphone startup Jio, which is producing a “free” Internet-enabled JioPhone that will bring connectivity to millions in the rural areas of India, effectively creating a brand new segment of smartphone users in the country.

The “JioPhone”, billed as a “4G-enabled feature phone” is Reliance’s bet that they can acquire more users by fulfilling one of the biggest holes in the supply chain, that is the lack of affordable 4G-enabled devices. The phone will introduce smartphone-like interfaces to first-time smartphone users, and will cost users nearly nothing. Customers will pay nothing for the device itself, but must put down a one-time refundable security deposit of INR1,500 (US$23.40), as well as pay for data packs that cost INR153 (US$2.40) per month.

Voice calling will be forever free, and deposits will refunded upon the return of the handset.

Despite being one of the biggest suppliers of Internet labor in the world, 60 percent of India’s mobile-enabled population still largely relies on phones that only provide calling and basic text messaging services. Analysts studying the potential impacts of the JioPhone say the device would benefit the poorest of India’s population, and provide them with the technology to access web browsing capabilities, as well as digital payments services.

The genius of the JioPhone lies in its “middle ground” quality—it’s not quite a smartphone in the traditional sense, and definitely light years away from the fancy, expensive options from traditional phone makers such as Apple, Samsung and Huawei; but it’s also got far more capabilities than a straight-up calls-and-text device, like old school Nokias.

Jio got its big break when Reliance decided to buy up the company for a staggering US$30 billion from India’s wealthiest man, Mukesh Ambani. Reliance’s move will hopefully create a kind of middle class of smartphone users, catering to a less cosmopolitan set who have never had accessible smartphone options, through local language scripts, long-lasting batteries and simple user interfaces. Users of the JioPhone will only be able to use SIM cards connected to the Reliance network.

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According to Reuters, Reliance plans on introducing near field communication (NFC) wireless technology into the phone, so as to make digital payments more accessible to the masses of India’s largely unbanked populace. This move is in line with Prime Minister Narendra Modi’s plan to get India more digital. Particularly relevant is his “Digital India” campaign, which is aimed at getting more Indians online; and his “Make in India” efforts to push for more locally made products.

Reliance will produce all of the JioPhones locally, with a goal to get five million phones off the conveyor belts by the end of the year. Manufacturers Foxconn Technology Co. and Flextronics Corp. will produce the handsets. A senior Reliance official told Reuters that there are concerns that demand may outstrip supply, but there are plans to ensure production targets hit a rate of five million devices a week.

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JioPhone will be well suited to users in rural areas as it comes equipped with chunky batteries, simple interfaces and local language scripts. Source: Reuters

The popularity of the JioPhone will likely cause some serious problems for traditional smartphone manufacturers who are battling each other in saturated markets all around the world. Margins are already razor-thin, devices are as cheap as they come for the kinds of components that are being used, and semi-conductor producers are struggling under the weight of overwhelming demand.

Analysts think that it is likely that other manufacturers will begin following in Jio’s steps in order to keep up, and some already are. Micromax, a huge name in India, has said that it is working on a feature phone rival, while Lava, who launched the very first affordable, 4G-enabled phone this year, said that it could plan for more releases if the demand was there.

“The concept of 4G feature phones is not new, and most Indian firms have already done their R&D,” said Jaipal Singh, analyst with tech research firm IDC, according to Reuters.

“Brands such as Micromax, Lava, Intex and Karbonn will launch similar devices to either compete or partner with Jio.”

SEE ALSO: Internet users to hit 730m in India by 2020 driven by rural adopters and smartphones

However, Jio has the war chest of Reliance to fall back on, and if the JioPhone proves to be the golden egg for the company, other competitors could find themselves stonewall-ed at every turn.

“The low-cost JioPhone will place pressure on Indian feature phone leaders such as Samsung, Intex and Lava, and make life harder for ambitious new entrants like HMD,” said Neil Mawston, an executive director at tech research firm Strategy Analytics, to Reuters.