Reliance Jio Phone challenge: Here’s how 2G manufacturers are planning to beat Mukesh Ambani’s ‘free’ mobile

By: | Updated: August 4, 2017 7:10 AM

Days after Reliance Jio announced that it will be coming out with a 4G feature phone, it seems that major 2G handset manufacturers are also running with the idea.

Earlier this week, domestic handset manufacturer Intex said that it will also be coming out with a 4G VoLTE phone called Turbo+4G priced at Rs 1,999. (File Photo)

Days after Reliance Jio announced that it will be coming out with a 4G feature phone, it seems that major 2G handset manufacturers are also running with the idea. Earlier this week, domestic handset manufacturer Intex said that it will also be coming out with a 4G VoLTE phone called Turbo+4G priced at Rs 1,999. Another domestic manufacturer that makes 2G feature phones, Micromax is also working on a 4G feature phone to be priced under Rs 3,000. Lava launched its 4G feature phone a few months ago, at around Rs 2,999. The company may still revise the price downwards in coming days. Analysts agree that Jio’s move to 4G feature phones is a major disruption that could kill 2G phones the way 3G phones got hit with the advent of 4G smartphones. However, views are divided over the speed at which it may happen and whether operators and manufacturers would be able to effectively compete with Jio.

Currently, there are around 780 million mobile handsets in the country, of which 500 million are 2G handsets and 150 million are 4G smartphones. There are around 210 million subscribers who spend around Rs 140 per month on phone bills, who would form the target audience of manufacturers and operators that launch 4G feature phones. Sanjay Kapoor, telecom analyst and former CEO of Bharti Airtel, says that with Jio’s launch the death of 2G phones is natural, the same way as 4G smartphones led to death of 3G phones.

Kapoor said that the launch by Intex of a 4G feature phone is a natural thing that is sure to be followed by others. However, according to him, the incumbent operators and handset manufacturers would still suffer from a handicap since they won’t be able to bundle services the way Jio is going to do. “Jio’s phone would be a locked one and so the subscriber stays with it. In the case of other manufacturers, the subscribers are free to purchase the phone and still go to Jio,” he pointed out.

Nidhi Markanday, director and business head, Intex Technologies, told FE, “Despite the tremendous growth in the smartphone user base in the country, India is still a feature phone-driven market. With the emergence of 4G or smart feature phone, it will act as a bridge for users who have been sceptical of switching directly to a smartphone and be able to get experience of high-quality voice calls and seamless high-speed internet at an affordable price.” Some analysts point out that even if incumbent operators do tie up with handset manufacturers, they would still need to carry voice over their 2G networks because they do not have a fully commissioned 4G VoLTE network.

Even Bharti Airtel has only about 60,000-70,000 4G sites currently. This would limit their ability to compete with Jio in terms of tariffs and bundling offers. Pankaj Mohindroo, president, Indian Cellular Association, says that though Jio’s move is a great disruptor and others are also going to follow in making 4G feature phones, 2G won’t die an instant death because apart from Jio, other operators have large 2G networks. “Therefore, all new feature phones would have to be such which work on all networks the way 4G smartphones work today,” he said.

Tarun Pathak, associate director at Counterpoint, offers an interesting take. According to him, as more and more manufacturers get into 4G feature phones, entry-level smartphones in the price range of Rs 2,000-3,000 would get affected. “Last year, 120 million smartphones were sold in India, of which around 5% were entry-level smartphones, and this segment will be impacted. But the rate of decline in the feature phone segment would get arrested,” he said.

According to IDC’s senior market analyst Jaipal Singh, though Jio’s move would take the feature phone market towards 4G, the shift won’t be as rapid as was the case with 4G smartphones. “This offering from Jio is expected to cultivate some new habits and add new use cases for feature phone users. Yet, this will not result in a market movement to 4G feature phones as quickly as it did in the case of the smartphones, where the share of 4G devices shifted from 11% to 65% in just one year,” he said.

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