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Over the past couple of years, prices of smartphones have gone down significantly in India. Domestic manufacturers like Micromax, Lava, Intex are known for launching feature-rich smartphones at a cheap price. Even Xiaomi phones are priced as per the Indian market. Despite that, millions in India are yet to upgrade to smartphones as they keep using feature phones. However, things are about to change soon.
As reported by ET, Bharti Airtel, Vodafone India and Idea Cellular are working with phone makers to make really cheap 4G smartphones. These smartphones could be priced as low as Rs. 500 and they will come bundled with voice and data plans for Rs 60-70 per month. "The approach is different from Reliance Jio Infocomm's strategy of subsiding 4G feature phones," notes the report.
Although low-cost smartphones bundled with voice and data plans will affect average revenue per user (APRU), the data consumption will increase in the medium to long term eventually proving to be an advantage for the telcos. The telcos expect to retain their user base while upgrading them to smartphones at the same time.
"We will gear towards low-cost smartphones via alliances. Smartphones are expected to become cheaper, so for an offering with them, it makes more sense than setting up our own phones," an executive at one of the telcos was quoted as saying. The executive also stressed on the part that they won't subsidize phones the way Jio has.
An executive at another operator said the plan is to bring down the smartphones' prices to the level of feature phones or even lower with bundled data and voice packages and cashback offers.
The report further reveals, the three carriers have already collaborated with phone makers to offer bundled data and voice calls as well as cashbacks for smartphones that cost under Rs 1,500.
Rajan Mathews, director general of the Cellular Operators Association of India, also thinks this plan will work. "They will have to revise pricing, may not go head to head, but could bring in plans for phones starting from Rs 60-70 range," Mathews commented.
Shobhit Srivastava, a research analyst at Counterpoint Technology Market Research, also said something similar. "The launch of low-cost 4G chipsets from Spreadtrum and MediaTek with Google's Android Go strategy makes it possible for OEMs to offer cheap smartphones that live up to the first-time smartphone user's expectations".
"The ideal upfront cost will be anywhere between Rs 1,500 and Rs 2,000. This can well come down to the level of Rs 500, depending on the plans that carriers offer" Srivastava added.