Akash Ambani’s Jio 4G Feature Phone Strategy – A Tariff War or Platform War ?

Akash Ambani, Chief Strategy Officer at Reliance Jio Infocomm has selectively dropped hints of the forthcoming 4G VoLTE feature Phone Launch sending shivers down the spine of Airtel and Vodafone executives.

When is the Launch of Jio Basic / Feature Phone ?
Timing of launch depends on the market segment Jio is planning to target. If target market is urban low-end, launch may be any time. However if target market is rural, next couple of months may not be a good time. Rural markets are linked to farming and thus have seasonal cash-flows with their cash collection months being October and February when they harvest and sell their produce in the market. Based on this the launch is likely in September / October the harvest season for farmers as well as being a festive season across India.

Jio 4G VoLTE Feature Phone is all about Platform War
Jio has indicated enough times earlier that it will be the Largest Digital Platform and in our opinion so far the team has executed the strategy very well. Jio disrupted the industry by embracing eKYC on-boarding of customer thus saving time & money. Jio totally disrupted the Mobile Broadband Data services market in India with 1 GB / Day offering at mere Rs 309 for 3 months. A-Vo-Id Telecom Lobby charged as High as Rs 225 for just 1 GB with validity of 28 days before Jio’s offer. We should whole heartedly Thank Jio for making Airtel and Vodafone invest in Telecom Infrastructure as we see the pace of Wireless Network Element deployment has increased in the last 30 months.

Now if you thought 4G feature Phone is to Unveil Telecom Tariff War ? Well it is Tariff War to Kill Airtel & Vodafone and create a new platform for itself for the future. Jio Feature phone is expected to be locked to the Network. Jio Feature Phone will most likely be equipped with the following Apps – Jio Chat, Jio Music, Jio Money, etc (constituents of my Jio App) which are all Billion Dollar platforms as you on-board users.

Will Competitors jump On-Board Jio Phone and Subsidize the Handset ?
The strategy could also be to get Google, Facebook and other Internet Giants to load their Apps on this phone share part of the handset cost. This will be a Win-Win strategy as Jio gets more consumers and Valley companies will pay Jio to get the platform & carrier to reach Rural masses in India.

Jio Rural Coverage a Big Challenge
There is no gain without pain and Jio is getting a taste of its share of pain attaining good rural coverage. In such a scenario, dual SIM handsets may bode well allowing it to get traction even if voice coverage is thin in these markets. However monthly spend on telecommunication services is below INR70 for low-end subs and splitting usage among 2 SIMs may not allow a new entrant to recover its acquisition costs.

Any thoughts how Akash Ambani could chalk this strategy differently with No Ordinary Disruption ?

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