Its new project could transform Indian smartphone market
Reliance Industries is on a quest to supply India with up to 200 million low-cost Android smartphones made locally, according to reports. The plan has the potential to speed the transformation of India’s economy and allow the company to reach its goal of establishing a greater digital ecosystem together with its partners.
If successful, among other achievements, Reliance could remake the country’s smartphone industry, much like it reshaped India’s wireless services business with its telecom operator arm, Reliance Jio, in a matter of years. Known for aggressive pricing and simple plans, Reliance quickly became a dominant force in the Indian communications industry and has won respect and the backing of global heavyweights including Facebook, Google and Qualcomm.
As part of Reliance’s bold ambition, local suppliers will be tasked with making a version of its JioPhone that would reportedly run the Android platform and cost about 4,000 rupees (about $54). These low-end smartphones would be marketed alongside low-cost wireless plans from Reliance Jio.
This project chimes well with the government’s push to encourage more domestic manufacturing, and this should deliver a much-needed boost for local brands like Micromax, Lava and Karbonn. These were once a strong force in the Indian mobile market but have since lost share to major Chinese makers Xiaomi, Oppo, Vivo and Realme, which together account for about 75% market share in low-end smartphones in India.
There’s a larger geopolitical angle here. Following a border skirmish between Indian and Chinese troops in June 2020, India has vowed to disentangle its tech economy from that of China. But unlike its ban on Chinese apps such as TikTok, the Indian government hasn’t halted domestic operations of Chinese smartphone suppliers, fearing that doing so would disrupt the country’s digitization. However, if Reliance’s new phone proves to be a formidable domestic alternative, the Indian government will have greater leeway to enact its nationalist economic plan, pushing foreign brands out of the market.
Reliance’s recent partnership with Google gains prominence in this project as the two companies have previously announced that they will work together on “affordable 5G smartphones”. This tie-up will see Google invest $4.5 billion in Jio Platforms, the technology subsidiary of Reliance Industries, and co-operate on tech initiatives (see Jio and Google Pair Up for Smartphone Push). But this partnership is still under regulatory review, so Reliance is currently working alone on its plan to expand smartphone adoption.
We believe that Reliance, with its deep pockets and marketing reach, has a good chance to succeed in popularizing its new smartphone. The company also has a fruitful history of bringing its own handsets to market at mass scale. In 2016, it launched a series of entry-level smartphones under the Lyf brand. The phones sold well initially, but no follow-up models were released. It’s unclear if Reliance will use its Lyf brand or start from scratch in marketing its value-for-money smartphone.
Many of the 400 million users of feature phones in India will be a potential market for the new smartphone. The ongoing pandemic is spurring people to upgrade their devices, as well as creating new opportunities. For example, parents are eager to buy devices for their kids so they can keep up with online lessons.
Led by Mukesh Ambani, Reliance’s efforts to build an empire spanning e-commerce, telecom services, social media and gaming are shaping up. Beyond that, we see a further opportunity outside India: we predict that Indian tech companies will be among the front runners in supplying low-cost devices in emerging markets, where the digital divide between the connected and the unconnected has become acutely visible in 2020.
To hear more about this, and many of our other predictions about future opportunities in the technology industry, join my Predictions Week session tomorrow free by registering here.
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