The upcoming launch of JioPhone Next seems to worry Airtel investors – is it the beginning of a new price war?
Targeting the US$50 smartphone segment is neither here (average Android phone ASP US$165), nor there (average feature phone ASP US$18). Android volumes at US$50 are thin.
We have seen the smartphone premiumization trend in many emerging markets, India included. As such, we think that JioPhone Next probably targets the feature phone upgraders with an affordable 1st experience device.
Jio also has a problem to solve: the 132m installed base of JioPhones is now 2.5 years old on average and due for replacement. Contracts are expiring and JioPhone users free to move to another carrier. It is quite possible that JioPhone Next is the replacement device of JioPhone. Concurrently, Jio is also targeting premium 4G segments at Rs499 and we should not conclude that Jio’s strategy is only a race to the bottom.
