Google and Jio seek to convert 450 million Indians into smartphone users


Google and Mukesh Ambani’s Jio hopes to break into one of the world’s largest untapped smartphone markets by launching a device that they hope will be cheap that will be able to use the “dumb” of 450 million Indians. “Mobile phones are transformed into smart phone users.

JioPhone Next, successor Ambani The earlier generation of JioPhone was designed by the company to run a customized version of Android. It will provide a mix of Google and Jio applications, and provide voice assistance in multiple Indian languages ​​for users with limited literacy. Analysts believe that its price will be less than $50.

“Jio is good at two things. One is large-scale launches. Two, price breaks [barrier],” said Neha Singh, founder of Bangalore data provider Tracxn.

Although she questioned how much money the two companies can make on this phone, the broader goal seems clear: to upgrade as many of the 450 million Indians who use 2G or even older smartphones as possible.

Ambani and Google’s parent company Alphabet’s CEO Sundar Pichai suggested that JioPhone Next could be launched elsewhere in the world because Google is trying to attract the so-called “next billion” global Internet users, and Jio is considering expanding overseas .

“Google wants to be the first call point for these users,” said Vivekanand Subbaraman, an analyst at Ambit Capital, a brokerage firm in Mumbai. “These new Internet users have never used a desktop computer. They don’t know that the Internet is an open protocol. For those new Internet users, these applications are the Internet.”

Video will be a huge opportunity. Acquiring new smartphone users, many of whom do not have a TV, watching YouTube or a cricket game streamed via JioTV will bring advertising data and revenue, as well as the basis for starting to sell services such as payment.

For Jio launched in 2016, it swelled users to 426 million at the lowest price, which is an opportunity to repeat the success of its original JioPhone. Ambani provides a basic 4G mobile phone with a deposit of 1,500 rupees (20 USD), which is refundable Three years later, To help move equipment over 100m.

Jio’s rapid growth helps attract $20 billion investment Last year came from Facebook and Silver Lake and Google. But this telecommunications company is under pressure to increase the number of users and revenue.

More than one-fifth of Jio subscribers are Not active, Its average monthly user revenue is 138 rupees (US$1.85), lagging behind rival Bharti Airtel. Ambani has said that he will list Jio on the open market, but he first needs to prove that it can allow more Indians to use smartphones and persuade them to use more Internet services.

A chart showing the Indian smartphone market

However, JioPhone Next faces daunting challenges. The Indian smartphone market is dominated by Chinese brands such as Xiaomi and Vivo, and Google’s previous efforts in the market, such as its Pixel smartphones, have failed to gain popularity.

According to investment bank Jefferies, it is expected that approximately 80 million existing JioPhone users will complete their contracts in the next two years, making them the low-hanging fruit of transactions that entice them to upgrade.

The remaining 300 million 2G users is also a difficult market to crack. Many of the economically vulnerable populations, such as migrant workers, are accustomed to talking to family members in their hometowns at a minimum recharge price of less than 50 rupees (US$0.67) per month.

The two companies have not yet announced the prices of the new smartphones. Due to the global shortage of chips and other mobile phone components, industry participants doubt whether a price tag of $50 or less is possible without resorting to large subsidies.

Pankaj Mohindroo, chairman of the Indian Cellular and Electronics Association, which represents mobile phone manufacturers, said: “I don’t think that the global supply chain situation will at least make costs significantly lower than existing participants.” “I don’t see the earthquake hit us.”

Google is trying similar projects elsewhere. Last year, in cooperation with French operator Orange, it launched a $30 “Sanza touch” smartphone in several African countries. They claim that this is the most affordable smartphone on the market, but sales are not high.

A million-unit bar chart showing strong growth in Jio mobile phone adoption in India

For Ambani, this new smartphone is one of several products he hopes to transform his energy-focused team into what he calls India’s “national technology champion”.

However, according to App Annie, only four Jio apps have entered the top 100 on the Google Play Store, including music streaming apps JioSaavn and MyJio, which bundle multiple services such as mobile phone recharge or quizzes. Jio’s chat and shopping apps lag behind the competition.

At the same time, Jio’s online shopping company JioMart is located in 200 cities, and its price is lower than its competitors, including Tata’s BigBasket or SoftBank-backed Grofers.

But according to brokerage firm Motilal Oswal, it still lags behind in metrics such as app downloads, revenue, and shopping basket size. The partnership with Facebook to provide services through WhatsApp is still being tested more than a year after it was announced.

Google hopes that its cooperation with Ambani will help it avoid the fate of Facebook’s first attempt to conquer the Indian Internet market, which has caused regulators to ban attempts to give Limited free internet So that it can guide users to use its applications.

Neil Shah, an analyst at Counterpoint Research, said that the “biggest obstacle” for this new phone will be its price. He said that even with subsidies, users may have to double the monthly fees they used to pay for cheap 2G services.

Another obstacle is whether it can make enough phones to satisfy the company’s ambitions. Given the shortage of components such as semiconductors, Mohindroo estimates that Jio can only ship a few million devices per month for the foreseeable future.

“The global mobile phone market is now very consolidated, and the sales of global players are very large,” he said. “Ensuring supply to these giants in a shortage situation will be a huge challenge.”

Reliance and Google did not comment.

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