JioPhone Next getting encouraging response, says Reliance Retail

The JioPhone Next smartphone, developed by the Reliance Industries-Google combine, has “received extremely encouraging response from retailers and customers” in both urban and rural areas, said Retail which is overseeing the device’s sales.

In its first comments since the 4G smartphone’s launch around Diwali, Reliance Retail told ET that there is no device in the market which is as rich in functionality available for an upfront payment of ₹1,999, which it said has attracted millions to the handset.

The device comes locked with the SIM of Reliance Jio, the telecom arm of Reliance Industries. Retailers are currently taking bookings for the smartphone and deliveries are expected to start in the coming weeks.

“The market response for the Pragati OS, especially its voice, camera and language features, has been very positive,” said Reliance Retail. The device is available only through JioMart Digital Partner retailers and these outlets “are being rolled out at an accelerated pace across the country”, it said.

Pragati OS is the operating system co-developed by Jio and Google for the JioPhone Next. The smartphone was launched just before Diwali with the aim of helping Reliance Jio target a bulk of India’s over 300 million featurephone users. The device is priced at ₹6,499, but can also be bought for an upfront payment of ₹1,999 and a processing fee of ₹500, with the rest to be paid in monthly instalments of over 18 or 24 months.

Analysts had seen the success of the new smartphone to be crucial for Jio as it targets a 500 million user base. The telecom operator had lost about 11 million users in the July-September quarter to end the period with 429.5 million subscribers.

Some retailers and market trackers said the device was facing challenges in the market, with the pricing affecting demand and adding to the supply-side concerns.

Analysts though expect Reliance to bring down the price of the device as the supply constraints, notably of semiconductors globally, ease and component prices reduce.

Vaun Mishra, an analyst at Counterpoint Research, said the ongoing component shortage is one of the reasons for its more-than-expected price.

“All the OEMs (original equipment manufacturers) are facing shortages, including Jio, which can affect its initial production as well. However, post the festive season, the demand will also come down, which could release some inventory pressure,” Mishra said.

The smartphone’s launch was delayed from September to November because of component shortages.

Mishra said the JioPhone price is four times the price segment of the featurephone customer. Sanyam Chaurasia, analyst at technology market research firm Canalys. He added that established brands such as iTel, Infinix and Realme have “already been offering smartphones with decent finance/EMI options”.

“It will be very tough to provide the hardware quality that this 400-million-strong mass market expects, as buyers have been using well-built sturdy featurephones for at least four to five plus years without any after-sales services,” said Chaurasia.

Manish Khatri, owner of Mumbai-based Mahesh Telecom, said “there’s no demand” as yet for the new device.

“We don’t know yet how the device will be activated as there hasn’t been any delivery yet. They haven’t provided training on deactivating the device in case a customer misses the EMI,” Khatri added.

Another retail industry executive, on the condition of anonymity, told ET that retailers will be getting a margin of 3-4% on the selling price of the JioPhone Next, compared with 8-12% for other brands. “The operational expenditures of running a store is high and smaller margins won’t work,” this executive said.


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