Early response to JioPhone Next encouraging

The initial response to JioPhone Next has been encouraging, as per data from UBS.

JioPhone Next has been jointly developed by Reliance Jio and the global internet major Google as an “affordable” smartphone option. UBS Evidence Lab conducted a flash survey (> Access Dataset) of 1,000 consumers aged 18 years old and above across India. Overall, as per the results of the survey, there has been a healthy initial response of the consumers with 33 per cent of respondents having already purchased the phone. Further 60 per cent of respondents have heard of it.

According to the survey by UBS Evidence Lab, among the 67 per cent who are yet to purchase the phone, 66 per cent show willingness to switch to the phone in the next three months. Broadly, the interest levels are the same across customers of all telcos, but higher interest is seen among feature phone/ basic phone users, as per the report.

This has addressed “one of Jio’s key objectives to use the device to accelerate the migration of 2G subs to 4G,” it added.

Key factors
The top factors driving the high interest levels in the phone are “value for money,” and “perceived good quality of the phone.”

“High satisfaction among early users, but “long-term” loyalty remains to be seen,” the report said.

Satisfaction level among early adopters
Satisfaction levels have been high among the early adopters of the phone with 77 per cent of respondents stating that their experience with the phone is better than previous Phones. Further, 79 per cent of respondents stated that they are extremely satisfied with the phone.

Even among smartphone users who have switched to JioPhone Next, 75-78 per cent stated that they are extremely satisfied and their experience is better.

“A larger percentage of feature phone and basic phone users have bought the JioPhone Next, as compared to smartphone users. This is not surprising as the JioPhone Next is primarily aimed at upgrading the feature phone user to a smartphone,” the report said.

However, 60 per cent of respondents currently using the JioPhone Next stated that they would switch to other operators post the expiry of the contract period.

“This suggests that operator loyalty in India remains low,” as per the report.

Payment options
In terms of financing the phone, users prefer upfront payment over EMIs. Of the respondents who have purchased the phone, 54 per cent have purchased it without any financing (price of ₹6,499) and 30 per cent have bought it with the 18-month installment option (upfront ₹1,999).

“This indicates a preference to pay upfront or minimize the number of installments (there were very low takers for the 24-month option),” it said.

“In our view, this will reduce time users are locked with the operator but also implies the product will likely only be able to convert the high-end segment within the current 2G users in India. A downward revision in the device price (which Jio has done multiple times for the earlier model of JioPhone) could potentially attract more price conscious 2G consumers as well,” it added.

Users stated that, on average, their monthly spend was up by ₹160 with the new device.

“”While this includes the EMI for the device (we believe), the increase in ARPU (assuming 2G to 4G migration) is likely to be in the range of ₹60-100 in our view. This increased spend could potentially lead to ARPU improvements for Jio, even without further tariff hikes,” the report said.

“On the other hand, given limited popularity of EMI plans, we expect the phone to have limited penetration among the mid and low-end 2G users where the upfront cost of ₹6,499 remains a key bottleneck,” it added.

According to experts, high price and limited interest in installments could limit migration of mid/low-end 2G users to the phone despite encouraging early trends. This could increasethe risk of an adverse price movement.

“For now, we believe risk-reward in the sector is balanced, and we maintain our Neutral ratings on Reliance, Bharti and Vodafone Idea,” it said. The Hindu BusinessLine