Reliance Jio Rs. 501 Surprise, Forcing Small Handset Firms to Shut

The game changer in the Indian telecom market Jio’s new strategy in the feature phone market may force many small handset companies to pack up.

Sector watchers and industry insiders said that latest move of RIL, which comes into effect from July 21 and is expected to increase its user base, will lead to a quick alliance of the handset market. They expect smaller feature phone-focused players to pack up and larger players to possibly scale down production to reduce their losses.

JioPhone detained an enormous lead at the top of the feature phone market as of March this year with 35.8% share, and the Samsung shifted to the second spot with 9.8% share, and Itel, Nokia and Lava with 9.4%, 7.3% and 5.6% shares, respectively, as per Counterpoint Research. RIL’s timing of the featurephone exchange offer under the Monsoon Hungama scheme will play chaos with the strategy of most players since it will come at a time when vendors plan to escalate production to tap into the likely high demand for the upcoming festive season, which peaks around Diwali.

“This has the potential to impact the 2G market largely and can lead to a quick consolidation in the feature phone market, Smaller vendors will try to de-focus from this category, whereas the other key vendors will cut down their volume in the short-term as a quick measure, and focus largely on the markets where 2G demand is still relevant” said Jaipal Singh, senior market analyst at International Data Corporation (IDC) India.

Although, most Indian featurephone players including Micromax, Lava, Karbonn, Intex, Jivi and key vendors including the Samsung, Itel or Transsion Group, Nokia and, smaller players who sell in lakhs over a year include RockTel, GFive, IKall, Qtel, Mido, Snexian, MTR, may just have to wrap up operations since they would not be able to match up to JioPhone’s scale.

To recall, the new Jio Phone 2 featurephone will be available for buyers from August 15th at just Rs. 2999. Jio Phone users who wish to upgrade to the new model will also have the offer named Jio Phone Monsoon Hungama offer where they can switch to Jio Phone 2 at a lower price such as Rs. 501 only. The JioPhone 2 is being called a high-end version of the JioPhone, runs on the special, KAI OS. This phone has coupled with 512MB RAM and 4GB of storage. The Jio Phone 2 occupies the dual nano SIM slots and has a 2.4-inch QVGA display. Even though the internal storage is 4 GB, it has an SD card slot where storage can be expandable up to 128GB. Coming to the camera of this qwerty phone, it assimilates a 2-megapixel rear and a VGA front camera. With a Battery capacity of 2000mAh, users can access the phone effectively with a good battery backup. Together with the QWERTY keypad, the device has a four-way navigation key and a dedicated button for voice command, same as the Jio Phone 1. The phone also announced a partnership with Google recently to get all of Google’s apps on to the platform.

Moreover, the earlier launched Jio Phone that has 25 million users across India, also going to get support for WhatsApp and YouTube and with the new JioPhone 2, the company aimed to sell 100 million units.