In probably the best outcome of stiff industry competitiveness brought about by Reliance Jio, existing telecom operators are working with handset vendors to create sub-Rs 1,000 smartphones. According to an ET report, we could see entry level smartphones priced as low as Rs 500.

The report states that telecom operators such as Bharti Airtel, Vodafone India, and Idea Cellular are working with handset manufacturers with the objective of creating smartphones at a price point that’s lower than feature phones. It’s also likely that these handset would have voice and data plans bundled with them for between Rs 60-70 per month.

Considering that Reliance Jio’s budget offering, the JioPhone, is only a feature phone with some smart features, this move by its competition comes as an opportunity for incumbent operators to outdo their fiercest competition.

It’s interesting that India, which until now was regarded as a price sensitive market has been selling many premium devices. For instance, a recent Counterpoint Research report highlighted a significant growth in the premium smartphone segment. It appears that while flagship products were selling, mid range consumers had begun stretching their budgets to accommodate higher end smartphones.

This also indicated a natural shift in overall consumer behavior. Consumers who were earlier using mid-range smartphones were upgrading to flagship devices. Similarly, early entry-level smartphone users were gradually migrating to mid-range smartphones. It is only natural then, for the basic feature phone consumer base to see an upgrade and adopt smartphones. Unfortunately, there is currently a gap between entry level feature phones and entry level smartphones.

This attempt by telecom operators to close this gap could result in millions of feature phone users get an upgrade. In return, as the ET report points, telcos could retain their existing consumer base. And users who would sign up for smartphones, would also see new opportunity to consume more data, and effectively start paying more to their operators, thereby maintaining healthy ARPU. -  BGR 


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