Following Karbonn, other local handset players like Micromax, Lava, etc are also looking at partnering Reliance Jio to manufacture internet-enabled feature phones on the lines of Jio Bharat to drive volumes from the feature phone segment, industry sources told FE. On its part, Karbonn may now explore partnering with Jio for making smartphones, sources added.
With Jio opening the scope for hardware and design, these local handset makers can develop co-branded feature phones and also become contract manufacturers of Jio Bharat phones to leverage smartphone production-linked incentive scheme, industry executives said.
“We are evaluating the opportunity and will take a call only after seeing the demand in the pilot stage which will give an idea of the market potential,” said an executive at a domestic handset company.
The reason behind Jio partnering Karbonn is due to UTL Neolyncs, which is common link between the two, according to industry executives. Karbonn is a joint venture between the Jaina group and UTL and UTL is also the manufacturer of the JioPhone Next smartphone.
Currently, China-based Transsion which makes itel phones is the market leader in the feature phone segment, with a 37% share, followed by Lava at 27%, and Nokia HMD at 15%, according to Counterpoint. Samsung, which is slowly exiting the market has a share of less than 10%, whereas Karbonn’s share is at 5%.
Of the total 1.14 billion mobile users in the country, over 275 million are unique feature phone users. Of the total feature phone sales of about 60 million last year, the share of 4G feature phones is less than 1%, according to Counterpoint.
“With Jio’s strategy to move users from 2G to 4G, phone makers can also benefit because of the opportunity in the 4G feature phone market,” said Shilpi Jain, senior research analyst at Counterpoint.
According to Jain, migration from feature phones to 4G smartphones has slowed down owing to higher prices and therefore, Jio’s affordable 4G feature phone will benefit the company in the long run by increasing its overall 4G subscriber base. Other players like Karbonn who are associating with Jio platform can also benefit from increased sales.
Navkender Singh, associate vice-president at IDC said, “As electronics manufacturing service players (EMS), local players like Lava and Karbonn can benefit. However, such companies will have to re-invest in marketing, distribution, channel and brand value.”
According to Singh, while domestic players partnering with Jio is positive for them but given the replacement cycle of about 3-4 years, the revenue potential would be limited in the already low-margin feature phone segment.
Jio will be launching the pilot of Jio Bharat phone, wherein it will be selling about 1 million phones across 6,500 tehsils with Karbonn.
According to Counterpoint, in the feature phone market the share of domestic players is at 38%, whereas in the smartphone segment it is only 1%.