Reliance-Google smartphone deal in India threatens Chinese companies

NEW DELHI (Reuters) – A $ 4.5 billion settlement under which Alphabet’s (GOOGL.O) Google will collaborate with Reliance Industries of India (RELI.NS) On a new smartphone it probably heralds a major shake-up for the world’s second-largest mobile market, industry executives and analysts say.

Reliance chief Mukesh Ambani, announcing the partnership at his company’s annual meeting last week, said Google would build an Android operating system (OS) to power a lower-cost “4G or even 5G” smartphone than Reliance. would design.

The new phone is configured to represent a great challenge for Chinese vendors like Xiaomi (1810.HK) and BBK Electronics, which owns the Realme, Oppo and Vivo brands, which currently dominate a $ 2 billion market for smartphones under $ 100 in India.

Powered by a clever combination of Bollywood, cricket-based marketing, and product features like powerful cameras, Chinese companies sell about eight out of 10 smartphones in the country.

“If history has anything to do with it, Reliance will undermine other brands and pose a real threat to the low-end smartphone market,” said Rushabh Doshi of tech researcher Canalys.

Reliance executed a similar plan in 2017 with the launch of JioPhone, a simple device that gave users internet access for as little as $ 20. JioPhone now has more than 100 million users, many of whom are internet novices.

“They (Chinese players) are likely to cut their price to compete and their margins could drop,” said A Gururaj, former Indian chief contract maker Wistron (3231.TW) and Flextronics. “I see the Google-Jio phone as a great success.”

Reliance’s ambition to deliver a smartphone to every Indian could also win subscribers to telecoms rivals Vodafone Idea (VODA.NS) and Bharti Airtel, which still has hundreds of millions of users with older feature phones on basic 2G networks.

Realme declined to comment. Reliance, Xiaomi, Oppo and Vivo did not respond to requests for comment.

Vodafone Idea and Bharti Airtel did not immediately respond to requests for comment.

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The alliance will see Google invest $ 4.5 billion in Reliance’s digital unit, which houses fiber and telecommunications companies, as well as music and movie applications.

Jio Platforms has also since April gained the support of global financial and technology investors, including Intel (INTC.O) and Qualcomm (QCOM.O), which could bolster your smartphone ambitions.

While Reliance has not provided details on the specs or pricing of the new smartphone, the time of its launch, or who could build it, the 387 million subscribers on the Jio network and the Google brand will give it a major advantage.

The Reliance-Google phone would likely be optimized for the Jio network and offer users better performance, said Arvind Vohra, a technology consultant and former head of India at Gionee of China.

Equally important are the possibilities to bundle Jio’s massive video and music libraries over the phone. Google’s Android team also aims to ensure access to health, communications, and work-related apps, and ease of use for first-time smartphone owners, Sameer Samat, vice president of Android, told Reuters and Play on Google.

That type of packaging could help attract an estimated 350 million Indians who still use basic non-touch phones and have yet to test high-speed mobile data on more sophisticated devices.

“This will help users choose a device for their bundled software and content rather than just specs,” said Vohra.

Collaboration with Google could also set the stage for new partnerships between smartphone makers and Reliance to create devices specifically for the Jio telecom network, analysts said.

Some Jio customers are already making plans to upgrade to the Reliance-Google smartphone when it hits the market.

“I would like to try the new Reliance smartphone and since I am already a Jio customer, my first preference will be to stay with the network,” said Rawil Ansari, a village construction worker in Bihar state, eastern India, which has I have been using a JioPhone for the past two years.