Google’s hefty investment into India’s Jio Platforms includes the opportunity to develop a cheap smartphone tailor-made for the Indian market
Just over a week ago, Silicon Valley tech behemoth Google announced it would be the latest major investor into Jio Platforms, an Indian telecommunications venture that is part of the Reliance Industries group overseen by billionaire Mukesh Ambani.
The US$4.5 billion investment comes on the heels of other foreign investors pouring funds into Jio Platforms. That includes Facebook, which sunk in $5.7 billion for a near 10% stake just two months back, making the social media juggernaut the largest minority shareholder.
In investing, the maker of the Android open source mobile operating system has spied an opportunity to co-develop a cheap, entry-level smartphone that is tailor-made for the local Indian market– which Google and Jio hope can be the gateway to reach half a billion new mobile users, primarily from rural communities, who have yet to own their first smartphone.
India’s growing mobile industry is attracting a lot of attention, with Counterpoint Research showing around 450 million Indians already possessing smartphones – but with over 500 million users yet to come onboard the smartphone and mobile internet boom.
“They should not be deprived of the benefits of the digital and data revolution,” said Mukesh Ambani, the CEO of Jio parent company Reliance Industries and the richest man in Asia, during Reliance’s 43rd Annual General Meeting (AGM) last week. He said that the goal of the partnership with Google is to design smartphones for a “fraction” of what they currently cost.
“Jio is a company that’s very focused on the rural side, because that’s the real India,” said Tarun Pathak, associate director at Counterpoint Research. “You have a big funnel [of] users who are yet to come on board and experience and taste this internet for the first time.”
Jio Platforms already sells cheap 4G phones with basic data plans and ‘lite’ versions of a few apps, but many within the unreached mobile internet market is using old-school feature phones: basic devices with keypads that run on the old 2G network.
Counterpoint’s Pathak says the Jio-Google alliance to provide the ideal entry-level smartphone could work with Jio Platforms providing the new users with affordable data plans, while Google serves them YouTube, Google search, Maps and other apps within its extensive mobile ecosystem.
Marketing cheap smartphones might not make the two entities a lot of money, but will provide them a gateway to access millions of new users who would then be adopting the Android OS and its apps, along with Jio’s localized stable of content apps. Google will also be able to push its Google Ads to a whole array of new eyeballs, as that is how Google’s parent Alphabet makes the majority of its US$162 billion revenue.
The Jio Platforms and Google deal could be a real disruptor for the Indian mobile market, which is dominated by affordable Chinese brands that account for over 75% of total sales in the second quarter of 2020, according to research firm Canalys.
But following the coronavirus crisis that led to declining device sales, and a recent border clash between Indian and Chinese troops gave rise to anti-Chinese sentiment that included banning all the popular Chinese apps in India including TikTok, a well-timed, cheap alternative from Jio Platforms and Google could provide the ‘in’ needed to make a substantial dent in the Indian mobile market.