Reliance Jio’s new budget smartphone will not be a game-changer in the short term, and telecom firm may face major headwinds due to chip supply shortages and rising key component prices, research firm Canalys said in blog.
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Component shortages have created supply chain problems and manufacturing hurdles for makers of smartphones. Both delivery lead times and cost of key components like displays and chipsets, have doubled during the pandemic, Canalys noted.
This means that for the first few years, Jio will have to burn cash to keep selling at a low price to gain share and establish itself in the sub $50 segment. Any further problems with components would be a considerable barrier for Jio and its local partner manufacturers. Established low-priced smartphone makers already have local manufacturing facilities and can better manage inventory levels in the current scenario.
Budget phones that mass market needs have to be well-built and must last at least for four years without any after sales support. This means Jio’s phone must be high quality, durable and be sold cheap to make any significant dent in the budget phone market.
Another challenge that Jio faces is the falling disposable income for consumers in the mass market segment. As a result, the first year of launch may not see millions of shipments for the smartphone. A slight recovery in the Indian market in the second half of the year may help sales for Jio, Canalys noted.
