Why success of ‘LYF’ is critical to the success of RJio

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Traditionally Indian telcos have shied away from venturing in the devices segment. They have hardly ever aped the western model of bundled devices. Predominantly, this is because of extremely low Average Revenue Per User (ARPU), high churn and dominance of pre-paid users.

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Now the new kid-on-the-block, Reliance Jio seeks to change this. Because of new technology it is almost imperative for the company to focus on the devices as well as its retail channel.

The new 4G technology means that a significant chunk of mobile users subscribers do not own a 4G device. However RJio subscriber is going to need a VoLTE device (not just any 4G device) to experience `True 4G’. As of now the device manufacturers have been focusing on 4G devices and not so much on VoLTE devices. However, RJio believes that VoLTE is what is going to differentiate its services from other 4G networks of Airtel, Vodafone and Idea Cellular. VoLTE is believed to offer enhanced services and better voice quality to the subscribers.

It can be said that the success of the venture depends on whether the subscriber experiences what RJio believes to be differentiated services and a subscriber can do so only if he/she owns a VoLTE device. It is not surprising that success of LYF, devices brand to be launched by RJio, is critical to the success of the latter.

The retail strategy and the pricing of the devices is thus of immense importance and can be the reason for the success or failure of RJio itself. So it is not surprising that the company is leaving no stone unturned before launching LYF branded handsets. Besides, its own brand, RJio has also tied up with Micromax, LG, Intex and Lenovo. Strangely, big brands like Samsung have decided to stay away from devices venture of RJio. (See: First Look And Feel Of Reliance VoLTE Service.)

"LYF phones will reach consumers across the country through one of the wides distribution and retail networks for smartphones. The handsets will deliver a true 4G experience comparable to the best in the world. The smartphone range will offer superior features like Voice over LTE (VoLTE), Voice over WiFI (VoWiFi), HD Voice and HD quality video calling, thereby enabling users to experience a new digital life," the company said in a recent statement.

With close to 2,900 stores, Reliance Retail is going to be the key vehicle of the company’s distribution strategy. However, since the company hopes to attract a high consumer of data services it is likely that online channels are going to play a critical role of their device strategy. The recent success of Xiaomi and other brands on online portals is a case in point.

Some of these devices are already available in the market. However, a key hindrance is that the network is yet to be launched, which means it is difficult to convince a consumer to buy a device, which he cannot use. Clearly, it is a chicken and egg situation for the company. Further the launch of services has been delayed so many times that it is bound to impact the decision of prospective buyer. Besides it is not clear whether the devices would be compatible with the existing networks of other telcos. As of now the VoLTE devices launched by company have not set the market on fire but it remains to be seen whether this will change once the network is actually launched.

A few years back incumbents were in pretty much similar position where 3G services were concerned. Devices were deemed to be too expensive for consumers leading to slow uptake of the services. However, even so they decided to wait for the prices to come down. Except for a few token deals by Idea Cellular and Airtel, incumbents stayed away from devices segment. RJio has finally bitted the devices bullet. It’s success or failure will not just be the deciding factor for success of RJio but also decide the telcos equation with devices.

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