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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

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.

KaiOS Eyes Global Expansion but Replicating India’s Success Would Be a Challenge

KaiOS has been the talk of the town after emerging as the third largest mobile operating system after Android and iOS. According to KaiOS technologies, it has garnered 100 million users over the past few years, with much of its success coming from India with the Reliance JioPhone.

India remains the largest market for KaiOS. However, the smart feature phone segment is now saturating in India. The growth rate is slowing down, and Reliance Jio’s focus may also shift to smartphones, to capitalize on the upgrade ready user-base. Therefore, a natural step for KaiOS is to expand into other emerging markets, especially those that have a similar demographics/economy.

Africa and LATAM are such markets. In LATAM, KaiOS entered the Brazilian market through the launch of Positivo P70S and Multilaser ZAPP. Later this year, it is likely to expand to other markets like Mexico. However, Africa offers a more compelling proposition.

According to Counterpoint, nine out of the top 20 countries with the highest potential for smart feature phones are in Africa. Earlier this year, KaiOS announced MTN Smart, marking its foray into the African market. Soon after the MTN Smart, it launched the Orange Sanza. Launch of both devices was through operator partnerships, something that KaiOS prioritizes. Not only is Orange partnering KaiOS to launch smart feature phones in Africa, but the operator has also participated in a Series B funding.

Partnerships with operators will help KaiOS make further inroads in African countries. In fact, through operator partnerships, KaiOS devices are already available in 22 countries across Africa. Clearly, Africa will be the next most important market for KaiOS after India. However, it might be a bit more challenging for KaiOS to replicate the scale and success it gained in India.

Among other use-cases like elderly population, and users looking for easy form-factors, the primary target consumers for KaiOS are the first-time high-speed internet users. These are mostly bottom of the pyramid population, which either has never experienced a mobile phone or are using traditional feature phones with limited data connectivity. Such users need to be shown the positive effects of data services to prepare them for monetization. Data needs to become a habit for the consumer before it opens up revenue opportunities. Hence, keeping the initial cost of accessibility low and developing relevant content should be the prime focus, and if successfully achieved, it will be pivotal for growth.

In India, the JioPhone’s launch price was US$20, which was refundable if the user returned the device after three years. This made the device almost free. It was also coupled with dirt cheap data rates. Further, there were a host of services at cheap prices which democratized internet usage in India.

Exhibit: Reliance Jio Ecosystem

The vertical integration of Reliance Jio and the application ecosystem played a key role in customer stickiness. This translated into an increased average revenue per user (ARPU). The same will be very difficult for any other operator around the globe to replicate.

In order to achieve scale in the African market, smart feature phones need to be cheaper than even US$20. Entry-level smartphones, available at a marginally higher price in Africa, can be a viable alternative. Also, smartphones remain a more aspirational product for Africans. KaiOS powered device has been launched at a lower price in other countries like Indonesia, where the device was launched as US$7 offering a much higher value proposition to consumers.

There is also a need for content and productivity applications to build user stickiness for the system. KaiOS has already been successful by striking the right partnerships across many players in the value chain and key partners. For content and productivity applications, developer partnerships are equally important. Many users are new to the app ecosystem. This offers a promising new market for developers – especially if they can develop relevant local content and services, something often missed by larger app developers in the mainstream app stores. Mobile payments could be one of the avenues which can be explored, especially in Africa.

The smart feature phone has carved out its place between a feature phone and a smartphone, as an affordable solution for high-speed internet access. With the success of JioPhone in India, many mobile industry stakeholders have renewed interest in tapping into the potential opportunity of upgrading feature phone users with a smart feature phone. The success of the segment depends on the balance of the three most important factors – device affordability, internet affordability, and relevant content. Partnerships among device OEMs, operators, KaiOS, and other ecosystem players will remain a key to achieve this balance. The smart feature phone ecosystem represents a US$28 billion revenue opportunity over the next three years – a number too significant to be ignored.

Please click here for our in-depth analysis of the smart feature phone segment.

More than a Billion Feature Phones to be Sold over Next Three Years

Globally, the feature phone segment is forecast to generate around US$16 billion cumulatively in wholesale hardware revenues over the next three years. India remains the largest market in terms of potential feature phone volumes followed by Bangladesh and Nigeria.

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

March 13^th, 2019

In contrast to the smartphone market, which contracted for the first time in 2018, the feature phone market has continued to grow over the last three years. Latest research from Counterpoint Research estimates that in 2019, a little more than 400 million feature phones will be sold globally. Further, feature phone shipments are expected to cross one billion units by 2021.

According to Peter Richardson, Research Director at Counterpoint Research, India and the Middle East Africa region will drive the growth of the global feature phone market by capturing nearly three-quarter of the market share in 2019. “India and the Middle East Africa region will see cumulative shipments of around 800 million feature phones out of more than one billion global feature phone shipments over the next three years. Globally, the feature phone segment is forecast to generate around US$16 billion cumulatively in wholesale hardware revenues over the next three years,” Peter says.

Exhibit 1: Cumulative Feature Phone Shipments Opportunity by Geography (Millions of Units)

While India remains the largest market in terms of feature phone volumes, it is closely followed by Bangladesh and Nigeria. In Africa, growth is led by brands like itel and TECNO.

Much of the growth of feature phones in India has been driven by the revival of the Nokia-branded features phones and the popularity of the Jio Phone, a smart feature phone which packs a chipset and an operating system that can support sophisticated smartphone-like features in a traditional feature phone form-factor. The Jio Phone uses KaiOS as the operating system. KaiOS has also been expanding its reach in Africa. At the recently held Mobile World Congress in Barcelona, KaiOS announced partnerships with African operator Orange to launch KaiOS-powered smart feature phones priced at US$20 across 16 countries in Africa and the Middle East.

There are several reasons why feature phones are the preferred mobile phone in many markets globally, despite the tremendous adoption of smartphones. An important factor is affordability. The bottom of the pyramid population across the world simply cannot afford a smartphone.

“There are more than three billion people across the world who live on an income of less than US$2.50 per day. This segment can neither afford a smartphone nor the data services demanded by the growing advancement in smartphone use-cases. Thus, a feature phone, coupled with basic mobile services has been the go-to offering for these users to communicate and connect. Most of these users are prevalent across Africa, parts of Asia and Latin America,” says Tarun Pathak, Associate Director at Counterpoint Research.

There is also a business case for network operators to push feature phones. In most markets, network operators want customers to upgrade from 2G/3G to 4G networks. “The problem is most of these users still cannot afford a 4G smartphone. Therefore, operators and the mobile industry players need to offer 4G VoLTE feature phones and move users to the more efficient 4G network,” says Pathak.

Counterpoint Research believes the rise of 4G capability in feature phones will be one of the key trends moving forward which will allow the feature phone segment to remain relatively resilient in the medium term.

Further, there are also several use cases that are driving the sales of feature phones. For example, industry segments like construction require rugged devices with technologies like PTT (Push-To-Talk) to cope with the hostile environment. Feature phones offer a viable alternative for this segment.

Similarly, there is also a need for longer battery life. Varun Mishra, Research Analyst at Counterpoint Research explains, “The emerging markets of India and Nigeria have the greatest number of people without access to electricity. However, the phone remains an important part of people’s lives in these regions as well. Amid the dearth of electricity, in some cases, the user is dependent on public charging stations (shops giving facilities to charge phones in return for a payment). Long battery life becomes crucial in such situations.”

Counterpoint Research believes that markets in Africa, especially Kenya, Ethiopia, and Tanzania have the highest potential for feature phones. In terms of the total addressable market opportunity, India, Bangladesh, Nigeria, Pakistan, and South Africa remain the key markets.

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in high-tech industries.

Analyst Contacts:

Peter Richardson
peter@counterpointresearch.com

Tarun Pathak
+91 997-121-3665
tarun@counterpointresearch.com

Varun Mishra
+91 991-502-0142
varun@counterpointresearch.com

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JioPhone: Accelerating India to Cross The 4G Chasm

The most disruptive 4G operator in India Jio, part of Reliance Industries, announced a category of 4G Feature Phone “JioPhone” which is essentially basic feature phone on steroids today on July 21 at the company’s Annual General Meeting (AGM). A brief analysis on this important development

This is as disruptive as the first 100M subscribers Jio raced to in just six months and will help Jio to potentially attract another 100M from rival’s total base of more than 400M 2G subscribers.

Reliance Jio has well thought through the overall value proposition of this offering to accelerate the next wave of 4G subscribers on its network and in process potentially connecting next half a billion users to internet over the next few years who cant afford or doesn’t want to upgrade to a smartphone form-factor.
The so called JioPhone will come in a candybar form-factor with an alpha-numeric keypad maintaining the same usability, however, features a 2.4″ QVGA color display, larger battery, expandable memory, voice commands to control specific “smartphone-centric” functions, pre-loaded Jio ecosystem and other apps while also sporting NFC to enable Jio’s mobile wallet “JioMoney” ambitions
Further, JioPhone subscriber can subscribe to the highly affordable a INR 153 (US$2) pack per month for access to unlimited calling and data, very much inline with average ARPU for Indian mobile phone user.
Furthermore, the users with an additional accessory can stream the live TV content app “JioTV” to their old or new TVs consuming content on a bigger screen for just INR309 (US$4) /month. Brilliant move to enhance the “internet consumption” use-case and make JioPhone a virtual Set-Top-Box (STB).
Putting icing on the cake, the JioPhone will cost Rs 0 (US$0) though with a catch where user will have to pay INR 1500 (US$23) refundable deposit which can be released after 36 months, very smart as it ensures a “lock-in” to the Jio network and ecosystem.

This is a truly disruptive offering with Jio aiming to make almost 5 million units available every week as we believe this will be in very high demand. Having said that, Reliance Jio will have to be careful on few fronts – product quality of this device, Quality of Service (QoS) blanket coverage right to tier-3-4 towns where most of the demand will come from as well as from component supply especially for the low-configuration memory in this device.

We have deep dived into how much this opportunity is from potential TAM demand side as well as supply side constraint perspective and how Jio can drive this into a sustainable and disruptive business model in our exclusive report (see here).

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Insights Tag： JioPhone

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

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