Does the Jio Phone really cost Rs 1500? Here's how much of it subsidised by Reliance.
Reliance Jio Phone has finally started delivering the devices. If you have already pre-booked the Jio 4G mobile, you will soon get it. According to recent reports, the phone will first come to the rural areas and smaller towns and then urban users will start getting the device. Clearly, with the Jio Phone, Reliance is targeting the low-end customer, especially the people who cannot afford a smartphone. The mobile is priced at Rs 1500, but it is effectively free since the buyers will get the money back after a period of three years. But does the Jio Phone really cost Rs 1500? A report suggests that the feature phone with 4G VoLTE capabilities cost much more than that. A Reuters report says that Reliance has subsidised the price of the 4G mobile by at least 40 percent. The report cited two sources who said that the company will recover the cost by investing in millions of new subscribers. They said that the Rs 1500 Jio Phone costs at least Rs 2500 to assemble.
This means that the making cost of the Jio Phone is at least Rs 1000 more than the price it is being sold at. It also means that for every 10 million devices sold, Reliance Jio will have to bear a cost of around Rs 1000 crore. One of the sources in the report said that Jio plans to build a huge subscriber base of around 250 to 300 million new customers over a period of 2 years. As of now, Reliance has not commented on the report. While investors may be a bit worried about the subsidised rates, however, Jio has set huge targets of luring in over 500 million Indian users who still cannot afford to buy a smartphone. Jio already has gained over 128 million subscribers since its launch in 2016, by offering free voice and cut-price data for months.
Watch Jio Phone unboxing video here:
What works for Jio is the fact that the network works only on 4G enabled smartphones. Such high-speed connectivity is unavailable to many even with subsidised rates. What Jio Phone does is it opens the world of web and technology to a majority of Indians who were still inaccessible. Jio’s other plan is also to increase the average revenue per user (ARPU) for feature phones from Rs 50 to Rs 153 at least.
The Reuters report quotes a source as saying, “The 3,000-rupee smartphone was not cutting it. Reliance is making a bold attempt with this phone and data will be the key driver for them.”