On Tuesday last week, Google launched the low-price Android One smartphone, attempting to target the ever-shrinking price gap between smartphones and phones without internet features. The Android One smartphone retails between Rs 6,000 and Rs 7,000.
Two days later, Jivi Mobiles, a mobile phone company based in New Delhi went a step further. It introduced the JSP 20: a smartphone for Rs 1,999.
Jivi’s JSP 20 smartphone does not have a fancy camera, a fast processor or a large screen, but it has one unique selling proposition: it is the lowest-priced Android smartphone in the market. The company aimed to smash the price barrier, and they’ve done just that.
Like the Android One phones, Jivi Mobiles has decided to sell this smartphone online exclusively, with Amazon.
The chart below demonstrates why companies are rushing to build smartphones even if the specifications of these phones are unimpressive.
The target audience for these phones are first-time smartphone users. Immediately after Jivi launched the smartphone on Thursday, Datawind, makers of the Aakash tablet, announced a phone for the same price as well.
Launching such low-end phones is a giant step towards extending Internet privileges to the many millions in India who are currently denied them. This is why it seems unquestionably strange that phone-makers are selling such ware exclusively online, on sites like Flipkart and Amazon. Representatives at both Google and Jivi said their phones will not be available at offline retailers anytime soon. They seem to want to sell phones to first-time users of the internet – via the internet.
Online exclusivity
From the phone companies' point of view, selling online has several benefits. It reduces costs on the supply chain and on commissions to web retailers. The hardware for these phones is sourced from China, which keeps prices to a minimum.
Pankaj Anand, CEO of Jivi, told Scroll that the reason they went online exclusive with Amazon is because this would help promote their brand. He also said that selling through traditional markets would involve a great deal of distribution and marketing costs, which was not currently worthwhile. He said the company would use offline retailers for the next few phones that it launches.
But this may not necessarily be the best strategy, warned Sanchit Vir Gogia, chief analyst and CEO at IT advisory firm Greyhound Research. “While it’s true that online marketing helps a brand go live, it doesn’t guarantee that your phone is selling," he noted. "It’s good to test a pilot and see how consumers respond to a product online, but for a brand to be truly successful, offline marketing is the way to go.”
If Jivi wasn't selling only online, it could have had enormous sales in smaller towns. "There’s a huge market that Jivi could have captured," Gogia said.
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Two days later, Jivi Mobiles, a mobile phone company based in New Delhi went a step further. It introduced the JSP 20: a smartphone for Rs 1,999.
Jivi’s JSP 20 smartphone does not have a fancy camera, a fast processor or a large screen, but it has one unique selling proposition: it is the lowest-priced Android smartphone in the market. The company aimed to smash the price barrier, and they’ve done just that.
Like the Android One phones, Jivi Mobiles has decided to sell this smartphone online exclusively, with Amazon.
The chart below demonstrates why companies are rushing to build smartphones even if the specifications of these phones are unimpressive.
The target audience for these phones are first-time smartphone users. Immediately after Jivi launched the smartphone on Thursday, Datawind, makers of the Aakash tablet, announced a phone for the same price as well.
Launching such low-end phones is a giant step towards extending Internet privileges to the many millions in India who are currently denied them. This is why it seems unquestionably strange that phone-makers are selling such ware exclusively online, on sites like Flipkart and Amazon. Representatives at both Google and Jivi said their phones will not be available at offline retailers anytime soon. They seem to want to sell phones to first-time users of the internet – via the internet.
Online exclusivity
From the phone companies' point of view, selling online has several benefits. It reduces costs on the supply chain and on commissions to web retailers. The hardware for these phones is sourced from China, which keeps prices to a minimum.
Pankaj Anand, CEO of Jivi, told Scroll that the reason they went online exclusive with Amazon is because this would help promote their brand. He also said that selling through traditional markets would involve a great deal of distribution and marketing costs, which was not currently worthwhile. He said the company would use offline retailers for the next few phones that it launches.
But this may not necessarily be the best strategy, warned Sanchit Vir Gogia, chief analyst and CEO at IT advisory firm Greyhound Research. “While it’s true that online marketing helps a brand go live, it doesn’t guarantee that your phone is selling," he noted. "It’s good to test a pilot and see how consumers respond to a product online, but for a brand to be truly successful, offline marketing is the way to go.”
If Jivi wasn't selling only online, it could have had enormous sales in smaller towns. "There’s a huge market that Jivi could have captured," Gogia said.