When rumors began circulating that Reliance Jio was planning to make a VoLTE feature phone, I had written an article detailing how a feature phone made perfect sense in Jio’s plans. But it has now become clear that not just Jio but the entire mobile phone industry is getting ready to embrace 4G VoLTE feature phones.
Just after the Jio VoLTE feature phone leak, Lava launched its own VoLTE feature phone and Micromax went on to release Bharat 1 and Bharat 2 which are among the most affordable VoLTE phones available on the market. But perhaps the most significant development came from Qualcomm. The company put together its entire current processor portfolio in the “Qualcomm Snapdragon Mobile Platform” and created an entirely new portfolio under the name of “Qualcomm 205 Mobile Platform,” so that the low-cost 4G VoLTE chipsets that Qualcomm is creating under the 205 series could be segregated from the rest of the company’s offerings.
Qualcomm has already released the first chipset in this series, namely the 205. This low-cost SoC supports VoLTE and VoWifi. Processing power wise, the chip is not a quantum leap from the previous generation low-cost SoCs but where it does indeed make a quantum leap is in terms of connectivity. Having VoLTE, VoWifi and most importantly 4G on such low-cost chipsets is a tremendous improvement from early years where low-cost SoCs would only support 3G and might in some cases come with support for 4G. There was very little chance that one could find a company like Qualcomm making SoCs supporting VoLTE for sub USD 50 smartphones, but that’s a reality now.
Considering that Qualcomm has launched a low-cost platform and not just standalone product, one can expect the current 205 series of chipsets to keep improving in terms of both connectivity and performance. Now that Qualcomm itself has thrown its weight behind the VoLTE and 4G feature phone bandwagon, there is nothing to stop 4G VoLTE feature phones from taking off. In the mobile phone area, especially in countries like India and other emerging markets, most of the grunt work is done by companies like Qualcomm. They provide an entire bouquet of solutions for mobile phone manufacturers to tap into. So now that there’s an entire platform in the form of “Qualcomm 205 Mobile Platform,” it is just a matter of time before more and more manufacturers start making use of it.
Indeed, Counterpoint Research itself has predicted that close to 60 million 4G VoLTE feature phones could be sold globally this year and close to 200 million over five years. I am attaching the relevant graph from Counterpoint below –
It can always be the case that VoLTE feature phones turn out to be duds but taking the current market situation into consideration, the chances of VoLTE feature phones succeeding is higher rather than lower. It is, therefore, interesting to analyze the long-term impact VoLTE feature phones can have on the market –
1. Finito, 3G Networks
Airtel, Vodafone and Idea would be in for a rude awakening. Currently, the price is not an issue on 4G networks considering the rock-bottom tariffs that Jio has introduced and which Airtel, Vodafone and Idea have no choice but to match. If someone has a 4G capable smartphone, it would make no sense to subscribe to a 3G data pack rather than a 4G data pack. 4G would obviously have a lower ping and faster speeds considering that technically, 4G is a far superior network technology.
One benefit that 3G operators had going for them was the price of smartphones and feature phones. Generally speaking, until the last year, 3G smartphones were noticeably less expensive than 4G smartphones. If someone was buying a smartphone for the first time, the chances were high that they would buy a 3G smartphone instead of a more expensive 4G one. This was what telecom operators such as Airtel, Vodafone and Idea were betting on as well.
However, as it turns out, the fall in prices of 4G smartphones has been steeper than expected. Perhaps the biggest game changer will be the 4G VoLTE feature phone. Now that a person would be able to buy a 4G feature phone or a pseudo-4G smartphone for just USD 50 or so – or even lesser if operators decide to subsidize the cost – then why will anyone opt for a 3G only smartphone?
Considering the rapid pace at which 4G rollouts are taking place and the rock bottom device prices and the rock-bottom tariffs all of which seem to have happened in such a short time, 3G will have a very tough time in India. There will be users who want to use their smartphones or mobile phones for voice alone and for them, a 2G network would suffice. But for users who want to use data, 4G would be their first choice. This leaves 3G in a precarious position between 2G and 4G. Neither is 3G coverage as wide as 2G for voice and nor is it as fast as 4G for data.
2. A blow for Internet companies
India has always been an open and fair market, unlike China, where the Government is believed to favor homegrown companies and protect them from foreign competition. Despite the recent protectionism calls from Flipkart and Ola, the Government has not favored them in any manner over Amazon and Uber.
Apart from fair government policies, the effort around Net Neutrality has also ensured that the Internet as such remains a level playing field for everyone. Currently, almost all smartphones sold in India are GMS certified which means that they all come pre-loaded with Play Store and other Google apps. The Play Store acts as a great leveler. If my smartphone does not have Ola installed on it then I can easily search for it on Play Store and install it. I can do the same for any other ride-hailing app like Uber, etc.
However, most of these 4G VoLTE feature phones would come with a forked version of Android or some other Linux based OS and many of them will not have access to any third party app store. This means that people buying these feature phones or pseudo-smartphones will be stuck with the apps that came pre-installed on them.
This would create a problem for companies that are not directly involved with the manufacturers building these feature phones or the operators that are subsidizing them. Assuming that these 4G VoLTE feature phones do indeed end up hitting a base of around 50 million or so then these 50 million users would become inaccessible to companies like Google, Facebook, Amazon, Flipkart, Ola, etc., unless and until they somehow make sure that their apps have been pre-installed.
3. Slowing down, smartphones
Although the Indian smartphone market is far from saturated, growth already seems to be slowing down a little. In 2016 for example, the Indian smartphone market registered a growth of just 5.2 percent annually compared to 2015 as reported by IDC. Most of the growth is expected to come from the lower end of the smartphone market, especially from people jumping from feature phones to smartphones.
But VoLTE 4G feature phones could end up acting as a choke point which would drain away all the growth of the smartphone market. This would be especially problematic for smartphone manufacturers that do not want to dabble in the VoLTE feature phone market and have smartphones alone. 4G VoLTE feature phones would also be very attractive to current feature phone users. They are not complex like smartphones but at the same time help users watch videos, listen to music etc like any other smartphone albeit without the complexity of touchscreen OS like Android or iOS.
4. A boosting kick in the VAS
In the early days of the telecom market, VAS was a crucial source of revenue and one that was highly lucrative considering the huge margins it would command. Telecom operators would charge as much as Rs 30 for a single song or Rs 20 for a wallpaper of the latest Bollywood movie. These ridiculously charged VAS practices are still existent but considering that most people now flaunt smartphones with access to a full fledged browser and app store, no one wants to pay telecom operators ridiculous prices for their ringtones or wallpapers.
But 4G VoLTE feature phones would open up the VAS market again for telecom operators. As I said, these feature phones would run a forked version of Android or some other custom OS based on Linux. There would hardly be any scope to install third party apps. This means that the apps that come pre-installed on the phone would be the only apps available to users in most cases. Considering that some operators like Jio are planning to unveil their own VoLTE feature phones pre-installed with their own apps and content, it would be just like the early days of the telecom market. Except that while in the early days, operators sold ringtones and wallpapers, current operators might sell videos and music. VAS 2.0? You read it first here.