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According to multiple analysts, even though JioPhone Next might not prove to be a market disruption, but it will definitely boost Jio's ARPU.
"JioPhone Next Will Push Reliance Jio's ARPU"
The JioPhone Next, claimed by Reliance as the world's cheapest 4G smartphone (spoiler alert: it isn't), went on sale starting last Friday after it got delayed from its initial launch date of 10th September. People who want to buy the entry-level smartphone can do so for Rs. 6,499; customers can also buy the phone for as low as Rs. 1,999 and then pay EMIs of Rs. 300-600 over the next 18-24 months.
Reliance Jio has made little secret of targeting the vast 2G user base of 300 million. From JioPhone 1, the telco has tried to bring those 2G users to its 4G network. The first two iterations of the JioPhone, 1 and 2, did pretty well; the telco has sold about 100 million units of those two combined. And with the JioPhone Next, the telco has set a target to sell about half of that number.
However, the phone is more of an exercise to push ARPU than the value. A telecom expert said, "there appears to be a shift in Jio’s strategy. It has not discounted the handset price to attract buyers and by tying up customers with an EMI of Rs. 300-600 it has focused on improving ARPU".
Incidentally, the company registered a "healthy" 3.7% increase in ARPU over Q2FY22, taking the same to Rs. 143.6. For context, Airtel's last reported APRU, at the end of June, was Rs. 146.
Nitin Soni, Senior Director, Fitch Ratings, said, "We believe that JioPhone Next will help the company to boost data growth and in turn help in improving ARPU and higher profitability. It will also accelerate the adoption of 4G service and help in Jio’s subscriber growth".
What's with that Price, Jio?
Most of us were looking forward to a sub-5000 smartphone, for some reason. JioPhone Next's price point divides opinions, especially after Mukesh Ambani had called it the "cheapest 4G smartphone in the world".
Emkay Global called the price point "not lucrative" in a report. The brokerage firm deemed supply chain challenges, and rising component prices in the face of global chip shortage as a factor contributing to the price point. The brokerage firm said, "in our view, the bottom of the pyramid/non-data subscribers might not have the propensity to pay the upfront cost of Rs. 1999 and high monthly EMIs".
Emkay added, "apart from first-time users, replacement demand could be a big potential opportunity to gain volumes".
Along with this, IDC India’s Research Director Navkendar Singh said that convincing feature phone users to pay Rs. 300 per month for the device plus data plan will be a massive challenge.
However, according to a person familiar with Jio's strategy, the telco never set matching the price to that of the competition in the segment as an objective. He said JioPhone Next has features that its competition does not have. These features include a voice translator or language assistant. Nitin Soni of Fitch Ratings also said that JioPhone Next’s price is affordable, considering its features and financing options.
The price point is disappointing, but given the challenges Jio and Google faced during the development of the phone, it seems a bit justified. However, no one's expecting it to be a revolution that it was deemed to be anymore.