The pair hope the affordable smartphone will persuade 450 million Indians to ditch their existing handsets and experience internet-connected devices for the first time
India is a country that has been undergoing massive digitalisation for many years now. In the last five years, internet users in India have more than doubled to around 700 million, with forecast’s expecting this number to increase to 900 million by 2025.
But while 700 million is certainly an incredibly large figure – over twice the internet users in the US – this represents only around half of India’s population, with more than half a billion people remaining offline.
Getting these people connected to the internet for the first time will be no small feat, but many believe that increasing smartphone penetration will be a crucial step. According to figures from Statista, India’s smartphone penetration in 2020 was 42%, with this number expected to increase to 51% by 2025, representing around 125 million people.
This growth –and indeed the remaining 49% of the population – is where Google and Reliance Jio smell an enormous opportunity. Last year, Google, keen to emphasis its commitment to a more digital India, invested in the country as part of a $10 billion “India Digitalisation Fund”. Around half of this investment went directly into securing a 7% stake in Reliance Jio, with Facebook and Silver Lake also taking stakes in the business. In total, Jio raised $20 million.
In an attempt to leverage this partnership and capture the nascent Indian smartphone market, Jio and Google announced last month that they would create their own, affordable smartphone, the JioPhone Next. The device would run a custom version of Google’s Android operating system, offering both Jio and Google apps, and have a price tag of less than $50.
As the device’s name implies, this is not the first time that Jio has launched a mobile phone, having marketed their LTE-capable JioPhone back in 2017. The device cost around $20, which was entirely refundable after three years, and sold more than 100 million devices. Around 80 million JioPhone users finish their contract in the next two years, with Jio hoping they will be able to entice these customers to upgrade.
For Google, the JioPhone Next could be the highly coveted avenue to Indian customers that they have sought for a while, giving them the opportunity to be at the centre of millions of peoples’ first taste of the internet.
“Google wants to be the first point of call for these users,” said Vivekanand Subbaraman, an analyst at brokerage Ambit Capital in Mumbai, speaking to the Financial Times. “These new internet users, they haven’t used a desktop. They don’t know that the internet is an open protocol. For those new internet users, those apps are the internet.”
But the move is not without its challenges. The Indian smartphone market is dominated by the likes of China’s Xiaomi and Vivo, who will not give up their market share without a fight. Similarly, the economic situation in India means capturing many new smartphone-less customers will be a challenge; over 300 million people rely solely on 2G communication for their mobile needs and do not have the financial capacity to swap to a new device with a higher price plan.
The JioPhone Next launches in September later this year. If successful in India, the two companies could consider rolling out the device in other markets around the world.
“JioPhone Next is powered by an extremely optimised version of the Android operating system that has been jointly developed by Jio and Google, specially for the Indian market,” said Mukesh Ambani, Chairman of Reliance Industries, at the device’s announcement during the virtual AGM last month. “This is a testimony to a global technology giant, and a national technology champion, working together to make truly a breakthrough product that can be first introduced in India, and then taken to the rest of the world.”
From Jio’s ecommerce platform, JioMart, launched at the start of 2020, to the company’s homemade 5G network solutions that it is currently testing, its clear that the company is aiming to follow a familiar pattern with its upcoming smartphone: leverage technology partners and local expertise the conquer the Indian market, then offer the product internationally.
How successful this strategy will be in the long-term remains to be seen.
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