Last year Jio caused a massive storm in the telecom industry by announcing free unlimited 4G internet and voice calls for nearly 6 months. The existing telecom services were nearly brought down to their knees as prices began to get slashed to match that of Jio.
All of a sudden, mobile data was freely flowing through the Indian population. Everywhere you go, people were dug deep inside their phone, streaming video content. The impact was tremendous and suddenly India had become the global leader in 4G mobile data usage (the speeds, are a separate matter), with Jio contributing to more than 90 percent of the traffic.
Now, Mukesh Ambani has now come out with the earth shattering introduction of the Jio Phone. Ambani has decided to tap into the feature phone market of India – which comprises more than 70 percent of the total phone market in the country. He launched the phone at a price of Rs 0. A refundable deposit of Rs 1500 will charged.
In return, the Jio Phone user will get unlimited 4G data extremely nominal rate and also free voice calls. For Jio, this device may represent its latest move to win more consumers, but from the industry’s perspective, the Jio Phone could very well end up being a major disruptor of the prevailing status quo.
With the Jio Phone’s success linked to Mr Ambani’s promises of fast migration of 2G subscribers to 4G VoLTE, the device might just be able to help Reliance Jio achieve its goal of a market with a majority of 4G users. This would mean the total end of 3G and 2G in the country.
The JioPhone Impact
The entry of Jio Phone – a low cost device primarily for users in rural areas – will force Reliance into improving 4G connectivity across the country.
The Jio Phone will clearly impact the low cost phone manufacturers such as Micromax, Intex, Lava, and force them to lower their phone’s pricing. This shakeup could cause a ripple effect that would lead to a price cut not only in feature phones from these manufacturers, but also other sub Rs 5,000 budget offerings.
Bharti Airtel and Idea’s earnings (and stock prices) fell significantly last fiscal – both from voice and data. Now, with the new offering where a phone is being offered virtually for free with attractive data plans, incumbent telcos seem to be caught unawares. A shakeout will likely happen sooner rather than later.
The Future of Jio
Jio is doing for the poor what Steve Jobs has been doing for the rich. The complexion of data services in the country will be changing drastically in the coming months and years. Jio has made Reliance one of the most valuable companies pushing the stocks of the company sky high.
An analyst who tracks the telecom market closely said the deal accompanying the Jio Phone will earn Reliance Jio Rs 90 in ARPU (Average Revenue Per User) per month. The rapid growth in data is likely to impact voice usage – a trend that has played out in every major telecom market around the world.