JioPhone Next Archives - Counterpoint

BoM Analysis: JioPhone Next Costs $58 to Make, Lays Robust Foundation for 5G Shift

The JioPhone Next is one of the cheapest 4G smartphones available in the market.
The device will help Jio shift hundreds of millions of 2G and 3G users to 4G.
The device will also make it easier to shift 4G users to 5G once the coverage has reached a good threshold.

Reliance Jio, in partnership with Google, launched the JioPhone Next 4G Android smartphone on November 4 last year. With an aim to shift hundreds of millions of 2G and 3G users to 4G, the telecom operator has worked hard with suppliers to maintain a very disruptive bill of materials (BoM) at around $58. The smartphone is being manufactured at Reliance Jio’s Neolync facilities in Tirupati and Sriperumbudur in southern India. While Qualcomm, Samsung and AI start-up Syntiant have benefitted from the first generation of JioPhone’s 4G Android smartphone offering, Chinese suppliers have also won some important design slots in the multi-million seller. This can be seen in the following BoM and specification analysis:

Display

The JioPhone Next features a 5.45-inch LCD display with 720×1440 pixels resolution and 60Hz refresh rate. The LCD is illuminated by backlight and is relatively inexpensive, making it an ideal solution for budget smartphones. The display is manufactured by upstart Chinese supplier TXD. For the cover glass, Jio has opted for Corning Gorilla Glass 3, which has alkali-aluminosilicate that offers some resistance to scratches and protection from accidental drops. The display, along with the cover glass, takes ~21% share of the BoM cost.

Storage and memory

When it comes to low-end budget smartphones’ memory, most brands opt to use an eMMC (embedded multimedia card) storage. However, Jio has opted to go for an eMCP (embedded multi-chip package) solution due to space and power constraints on the PCB. An eMCP offers a smaller footprint compared to an eMMC. Sitting between eMMC and UFS (universal file storage) solutions, an eMCP storage combines NAND and DRAM to minimize latency and cut down on power consumption. 2GB of single-channel LPDDR3 SDRAM running at 672 MHz and 32GB of eMMC 5.1 flash is manufactured by Samsung and accounts for ~22% of the BoM cost.

Processor

The JioPhone Next is powered by Qualcomm’s QM215 SoC produced on a 28nm process node. The QM215 is a toned-down variant of the Snapdragon 425. This chipset is specifically designed to work on ultra-low-cost Android Go phones. The QM215 packs four ARM Cortex-A53 cores clocked at 1.3 GHz, which aim to increase the CPU performance by 50% compared to the earlier Qualcomm 2-series platform. The QM215 also packs in a third-generation Adreno 308 GPU clocked at 500 MHz, which has 24 ALUs (arithmetic logical units) that can perform 27 Giga-floating-point operations per second [GFLOPs FP32 – (single precision)].

Neural Processing Unit (NPU)

The smartphone also packs in a special speech recognition NPU from Syntiant. This NPU – NDP101 – is manufactured on a 40nm ULP (ultra-low power) process node featuring a single Core Arm Cortex-M0 CPU coupled with 112KB of SRAM that is capable of running deep learning algorithms efficiently for all the offloads from CPU and in ultra-low power consumption use cases as well.

The NPU supports an always-on listening feature, and wake-up-to-speech and voice commands, a key differentiator for the phone to bridge the “digital divide” by supporting multiple local languages not only for wake word but also translation. Reliance Jio’s partnership with Google has also brought along Pragati OS, an optimized solution of Android GO.

The processing section together contributes ~11% to the BoM cost.

Camera

The smartphone offers a single 13MP camera, with a 1/3″ sensor from SK Hynix, on the rear flanked by an LED flash. On the front, there is an 8MP camera with a 1/4″ sensor. Both camera modules contribute to ~9% of the BoM cost.

Sensors and connectivity

The JioPhone Next’s nominal sensor array includes accelerometer, proximity and ambient light sensors. Wireless connectivity choices include Wi-Fi 802.11 b/g/n, Bluetooth 4.1, and AGPS (indoor positioning). The single-band Wi-Fi and Bluetooth combo IC is powered by Qualcomm’s WCN3610.

In terms of connectivity, the Qualcomm 215 sports a Snapdragon X5 LTE Cat 4 modem with support for VoLTE, VoWiFi, EVS and Dual SIM Dial VoLTE, which are a key feature for emerging markets such as India. It is the first 2-series platform to support 802.11ac and Bluetooth 4.2. The SoC also supports dual camera ISPs. Sensors and connectivity together contributed around ~11% to the BoM cost.

Battery

The Jio smartphone packs a lithium polymer 3400mAh battery with a 13.09Wh rating. It is manufactured by Guangdong Fenghua NEW Energy. The battery is charged via a micro-USB port. The device features Qualcomm’s Quick Charging IC. The battery along with the power management ICs accounts for ~9% of the BoM cost.

Key takeaways

The JioPhone Next is a unique smartphone for its price segment, retailing at around $55-$80 (INR 4,400-INR 6,400) depending on the seasonal/regional/buyback offers, supported by a compact design. This makes it a compelling device for budget-oriented and feature phone users to cross the chasm.

Leveraging its scale, Jio has designed an optimum BoM for this smartphone despite supply chain constraints and increasing component prices. Jio has closely worked with Google to optimize the entire experience for the chosen hardware stack.

The device rounds up Jio’s strategy well — first, to use the JioPhone Next 4G to attract hundreds of millions of 2G feature phone users to its 4G network and second, to aim to deliver a sub-$100 to sub-$150 (INR 8,000-INR 12,000) affordable 5G smartphone once the coverage has reached a good threshold to attract the mass-market 4G smartphone users to its 5G network. This two-pronged strategy will be the key to Jio’s growth and extend its leadership to the 5G era as well. Further, at some point in 2024, Jio will also be compelled to launch an affordable 5G mmWave + Sub-6 GHz smartphone as the cost deltas between the two would have narrowed significantly from the BoM perspective.

For detailed component and pricing analyses, queries or to acquire this research, contact info@counterpointresearch.com

Is JioPhone Next the Most Affordable Smartphone?

On November 4, Jio launched the JioPhone Next, its much talked about and anticipated smartphone with Google. The device is being marketed as the most affordable smartphone. It comes at a down payment of INR 1,999, with the rest required to be paid via EMIs bundled with various plans.

Exhibit: JioPhone Next

Source: Jio

The retail price of the phone is INR 6,499 when paid in full. The device also comes with a customized version of Android Go – Pragati OS.

Jio’s Value Proposition, Target Consumers

India is still an underpenetrated smartphone market with over 300 million feature phone users, out of which over 60 million are JioPhone users, which represents an immediate opportunity.
Jio is also aiming to make India 2G free and connect the unconnected. Notably, Jio does not offer 2G services, and upgrading 2G users to 4G can increase its consumer base substantially.
Then there are existing smartphone users who are willing to upgrade. There are very few players in the entry-level market due to low margins and high distribution costs related to lower-tier cities, where most of the target customers live. However, Jio already has an extensive retail network which it can leverage to distribute the device.
Jio offers the JioPhone Next device on easy EMIs, and a consumer does not need a debit or credit card to access the same. Almost all OEMs are now offering EMIs but consumers need to have a debit or credit card for the same in most cases.
In terms of specs, Jio has prioritized certain aspects like camera, one of the most sought after features by consumers.
The phone also comes with Corning Gorilla Glass covering at a low price point. The repair cost here will be a big burden and Jio understands this.
Features like Voice First, Read Aloud and Translate Now help increase the ease of use and flatten the learning curve of smartphone usage. The phone also comes with the promise of future updates.
While the device overall has a feature set, which reduces the barriers to the adoption of smartphones, pricing remains the most important aspect for this segment.

Pricing Analysis

The biggest value proposition for Jio is the down payment of INR 1,999, which makes it the most affordable device. The consumers will also have to pay an INR-501 processing fee, while the remaining amount can be paid through EMIs which are bundled with a service plan. Jio has a device lock software, which restricts access to the device if the EMIs are not paid on time.

Exhibit: JioPhone Next Plans

Source: Jio

The low down payment is great for entry-level consumers, who cannot spend a large sum for a device initially but can pay small monthly amounts. However, notwithstanding the low down payment, the total cost of ownership for the JioPhone Next is very high.

The entry-level Always-on plan for Jio starts at INR 300 per month for 24 months and offers 5GB of data per month with 100 minutes of calling. Considering the data usage in India is over 14GB per month per user (Source: Ericsson Mobility Report, 2021), the 5GB per month mark is too low.

The next plan is the Large plan. It offers 1.5GB of data per day with unlimited voice calls at INR 450 per month for 24 months. When the device is bought at full price (INR 6,499), with a comparable prepaid plan of INR 199 for 28 days offering the same benefits as the Large plan of the JioPhone Next, the total cost of ownership for 24 months is reduced by 13%. The cost can be brought down further if a consumer chooses to use a refurbished device or a lower-cost device.

Also, if we subtract the data plan cost in the prepaid plan (INR 199) from the total cost of ownership of the JioPhone Next for 24 months with the Large plan, the device cost comes out to INR 7,681, compared to INR 6,499 when paying the full price. This is the same as charging interest on the EMIs for the device, which might not be a feasible value proposition in the segment Jio is targeting.

Conclusion

Jio has tried to launch a device with key features done right, which makes the transition from feature phone to smartphone easier. Overall, the JioPhone Next checks a lot of boxes except the most important one for this segment – pricing. Therefore, the overall value proposition falls short of being lucrative.

There were a lot of expectations from Jio for a lower-priced device, especially after how it disrupted the feature phone market with the JioPhone. The JioPhone Next definitely brings down the initial cost of device ownership and somewhat lowers the barriers of entry into the smartphone segment. But it also locks the users for 18 to 24 months in EMIs at a cost which is less lucrative than other available options. Unlike the JioPhone, the JioPhone Next fails to create its own market segment.

One of the reasons for more than expected pricing for the JioPhone Next is the ongoing component shortages, which are leading to price increases. OEMs that run on lower margins have no option but to pass on this added cost to consumers. Then there are other costs which have also increased, like transportation.

Jio is trying to address the difficult-to-capture lower-tier market at a scale that has not been seen before. In the process, it is building products, supply chain and mind share in the lower-tier segments. Therefore, consumers will think of Jio first when deciding to transition from feature phones to smartphones.

For a more detailed analysis on pricing, specs comparison with competitors and forecast for the JioPhone Next, subscribing clients can refer to the following report:

JioPhone Next Component Shortages Weigh Down on Pricing Strategy

India Smartphone Market Set for Record Shipments in 2021

India’s smartphone market will reach 173 million shipments in 2021.
More than 100 million smartphones will be shipped in H2 2021.
5G devices will make up 19% of the overall market.

India’s smartphone market shipments are set to hit a record high of 173 million units in 2021 at 14% YoY growth, according to Counterpoint Research’s India handset quarterly outlook. More than 100 million smartphones are expected to be shipped in H2 2021. The market has been experiencing strong consumer demand after the lifting of COVID-19 restrictions in June. The strong sales momentum will continue during the festive season from August to November.

The market has been experiencing a steady growth curve over the last five years to reach 158 million units in 2019. COVID-19 saw the market experiencing only a minor dip of 4% in 2020, showcasing its resilience as well as the emergence of smartphones in a more important role to cater to the pandemic-triggered need for digital communication and newer use cases. Even as the second COVID-19 wave hit the country in Q2 2021, the smartphone market bounced back faster than expected and registered its highest ever shipments in H1 2021.

As the number of COVID-19 cases remains under control and the vaccination program continues, the economy will bounce back and raise consumer confidence. The pent-up demand will also play a role, although its impact will be limited compared to last year as COVID-19 lockdowns were shorter this time around. The biggest factor pushing the market could be the launch of Reliance Jio’s low-cost Android phone JioPhone Next in September, which will enable migration of feature phone users to smartphones.

JioPhone Next to trigger feature phone-to-smartphone migration

India’s smartphone market opportunity is far bigger than what it seems to be. The country has a considerable installed base of 320 million feature phone users. Getting these feature phone users is the key to realizing the full potential of India’s smartphone opportunity. The JioPhone Next phone is expected to be priced below $75, a price point that hasn’t seen major activity in the last two years. If it works as expected, we might see the Indian market entering a period of hyper-growth.

5G smartphones to grow 8X in 2021

In 2020, 5G smartphones accounted for less than 3% of the market. But in 2021, the market for 5G devices will grow over eight times to reach 32 million units and make up 19% of the overall smartphone market. Intense competition among OEMs, availability of cheaper 5G chipsets and declining prices of 5G devices will lead to more 5G devices being pushed into the market. The average price of entry-level 5G devices has come down by 40% in the last 12 months. The cheapest phone with 5G now costs less than INR 15,000 (around $200). Preference for 5G devices is also high in India, with 21% of consumers claiming it is one of their top three priorities while purchasing their next phone.

Long-term outlook remains positive

India’s smartphone market is the second biggest market in the world after China. In 2020, the Indian market outperformed the North America, Latin America and Africa markets. Our outlook for India for the next five years remains positive, keeping in mind its 1.39-billion (and growing) population, upgrade of users from feature phone to smartphone, and future emergence of new use cases. The market is set to cross the 200-million mark in the next couple of years.

The comprehensive and in-depth Market Outlook is available for subscribing clients. Feel free to contact us at press(at)counterpointresearch.com for questions regarding our latest research and insights.

JioPhone Next: Google, Reliance Jio Eye the 'Next 500 Million' Smartphone Users

Reliance Industries (RIL) held its 44th annual general meeting (AGM) on June 24, 2021, where Chairman Mukesh Ambani updated the shareholders and media on the company’s progress and its future plans. RIL’s telecom arm Reliance Jio has already disrupted the sector by democratizing 4G voice and data offerings, which are the cheapest across the globe. The launch of JioPhone in 2017 at an “effectively free” price proved successful in helping unconnected users experience internet for the first time. After selling over 110 million JioPhones, Jio has now announced the JioPhone Next 4G smartphone.

The JioPhone Next is a result of the strategic partnership between Google and Reliance Jio that was announced at the 43rd AGM last year. Google has invested $4.5 billion for a 7.7% stake in Jio Platforms. The partnership aims to democratize smartphones to offer the most affordable Android smartphone with optimized OS and Jio experiences.

Source: Reliance Jio

JioPhone Next Designed for the Next Half Billion

While Jio did not reveal the specifications and pricing of the JioPhone Next, it did reveal that the smartphone will be available starting September 10. Jio also revealed that the smartphone runs on an optimized version of Android, with support for latest Android software and security updates. Ambani also highlighted that besides being ultra-affordable, the phone will include some cutting-edge features, such as:

A voice assistant to check the latest weather updates, prepaid balance on My Jio, and cricket scores. It will also play music on JioSaavn.
Translation of on-screen text into the user’s language and read-aloud features across the OS – web pages, apps, messages, and more.
Smart camera with HDR and low-light night modes, and built-in Snapchat lens filters for selfies.
Google Play Store for accessing apps and games, along with Google Play Protect built in for security.

The cheapest Android smartphone, Itel A23, sold by Reliance Jio is priced at INR 3,799 (around $51). If Jio and Google plan to subsidize the JioPhone Next, it could be available for well under $50, making it a killer deal. But we will have to wait till Jio officially announces the pricing in the next few months.

Opportunity for Reliance Jio’s Ultra-affordable 4G Smartphone

Reliance Jio now has over 425 million subscribers and is the first telecom operator from a country outside China to achieve this milestone. Jio looks to accelerate its growth by adding millions of more users in coming years, considering India is still one of the most under-penetrated smartphone markets in the world.

India’s population stands close to 1.39 billion, which has around 850 million unique mobile phone users at 61% mobile phone penetration. This leaves around 540 million of unconnected users who do not own a mobile phone yet. This unconnected segment mainly includes children, elderly people, and the ones below the poverty line.

According to our estimates, out of the 850 million unique mobile phone users, nearly 530 million are smartphone users, whereas roughly 320 million are feature phone users. With JioPhone Next, Reliance Jio is staring at a potential 520 million users. These include around 150 million unconnected, 50 million second hand/older used smartphone users due for upgrade and the 320 million feature phone users (including 4G Jio Phone smart feature phone users).

The 60-65 million active 4G Jio Phone (smart feature phone) users are probably the lowest hanging opportunity for Jio to upgrade them to Jio Next and boost ARPU and services usage. Simultaneously, the 2G feature phone users from Airtel and Vodafone Idea will be an important segment to target aggressively with this new ultra-affordable smartphone from Jio.

Jio Needs to Broaden Value Proposition for Jio Phone Next

In the new normal of work and learn from home, a smartphone holds more importance in a mobile-first country like India. Reliance Jio will look to first attract millions of feature phone users to its 4G network via the JioPhone Next and then some portion of the next half a billion population which is yet to buy its first mobile phone. Further, the COVID-19 pandemic is likely to have disproportionately impacted the livelihood of people at the bottom of the pyramid and Jio will need to present a very attractive value proposition to help these potential 4G smartphone users “cross the chasm”.

When Jio introduced the JioPhone in 2017, it was priced at INR 1,500, roughly $20. This acted more as a refundable security deposit, where after completing three years of usage, users could return the JioPhone and get a refund of INR 1,500. Considering this three-year contract expiry is nearing for most users, offering attractive upgrade deals would be a good way to ensure users remain “locked in” the Reliance Jio network and ecosystem.

Further, we could expect a “direct subsidy” as well as a “reverse subsidy” from Google and Jio respectively to make the device more affordable and price points closer to the earlier Jio Phone. EMIs, buybacks and cashback offers should also help broaden the value proposition.

Overall, Google and Jio’s partnership for JioPhone Next should help both companies to reach more users. For Google, it is a way to attract millions of users to the Android ecosystem and boost its existing global base of 3.1 billion users closer to 4 billion users in the near- to mid-term. But the real test will be to see the kind of Android experience this smartphone can offer at much lower price points. Google had earlier failed with its Android Go and Android One programs but with Jio it could be different as the suite of services and optimization actually is designed to bridge the digital divide. If this works, the next goal would be to scale this offering across other under-penetrated emerging markets.

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Insights Tag: JioPhone Next

BoM Analysis: JioPhone Next Costs $58 to Make, Lays Robust Foundation for 5G Shift

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