iPhone SE : A Challenge to Android

Apple continues to refresh its product lineups in 2020, which it started last year along with introduction to new apple services as a response to falling iPhone sales. Lesser number of iPhone are selling globally since smartphone industry is facing a slowdown worldwide with major markets like US reaching saturation point. With a reliance of more than 60% of total revenue on iPhone sales simply means Apple had to renew its old products and give people another reason to go and buy those to keep up-to expected quarterly figures.

One such product is iPhone SE, a refresh to original version launched in 2016. Apple made this phone possible by replacing brains of iPhone 8 by Apple's most powerful chip till that date (A13 Bionic). One other cosmetic change to make it distinguishable from iPhone 8 is to move that Apple logo (on the back) down to center.

source : wired

There are both demand and supply side justification for this new iPhone launch. Looking at demand side, people who can't get along new drastic changes with ever-evolving design, holding back to old iPhone and are in need of familiar hardware and software experience to upgrade, now have an excellent option in form of this is new iPhone. It can also be a good buy for first iPhone experience and such people are generally who are on android side of world, held by hefty price tag on new iPhone. iPhone SE is indeed a special edition phone because profit from each piece of iPhone sold is gonna be comparable to more expensive iPhone. This is possible in case of iPhone SE since Apple don't need to spend on R&D, a major cost factor for any other iPhone. Apple is seeking benefits of proprietary processor and already available design and production assembly of iPhone 8.   

Despite being a silent launch amid pandemic crisis, this phone started creating a lot of buzz among smartphone enthusiasts and reviewers and that's all because of it being cheapest iPhone model with starting price of  $399 in US. This new phone was very well received by online publications in US, in spite of  packing an age old hardware and design, citing all improvements Apple's A13 Bionic chip brings like improved raw computing power, next-gen HDR processing for photos and power efficient processor for better battery life. All this but more importantly highlighting that a brand like Apple which is generally associated with premium product and pricing, now has compelling option in smartphone under $400. Viewers around the globe having built same opinion on this new iPhone after going through these reviews. This can create a serious problem, since not every region is like US when it comes to smartphone market.

Consider case of world's second largest smartphone market - India. Compared to US, a buyer in India will have to spend 40% more to grab a starting model of this new phone i.e. 42.5 K Indian Rupees. When keeping in mind that average selling price of phones in India is still less than $160, a phone which is targeted as semi-premium mid-range option in US becomes a premium option in India. This high price also becomes unnoticeable when price war is prevalent in budget and semi-premium smartphone segment and there are several tempting options in android world like OnePlus 8. 

If someone had bought entry level variant of iPhone 8 in India, back at its launch in 2017, it had set him back 64 K Indian Rupees. This was back when only original iPhone SE and iPhone 6S were being assembled in India. In Mar 2019, Indian Govt. had approved Wistron's Rs 5000 Cr investment proposal to setup a mega-factory. This was big boost for Make India as newer iPhone models like iPhone 8 were getting ready to be manufactured in India. Indian made variant of original iPhone SE and iPhone 6S were  around 40% cheaper compared to importing from other country. Going by same figures and local manufacturing of new iPhone SE since it is essentially a revised iPhone 8,  iPhone SE could have started at a price around 38 K Indian rupees.

A 50% hike in GST on smartphones (from 12% to 18%) accompanied with weak Indian Rupee especially during pandemic crisis are a few reasons behind a price tag which otherwise could have been much more tempting for smartphone enthusiasts. Apart from these reasons, there are other possible explanations which focus on market demographics, product placement and pricing strategy. 

Two Chinese players dominate Indian smartphone market with a combined market share of 68% (as of Q4 2019) - Xiaomi, BBK Electronics. There is an ongoing fierce battle among various brands of these two players to undercut opponent's product offering by releasing same or better spec'd product at lower price. Their short term objective to sell as many phones as possible by keeping low profit margin, is to built a loyal user base for their long term aim to be leading Internet company. 

Apple has same long term objective but it's approach is different. Apple is never going to compete in this price war because it can't afford to lose it's reputation of being a premium company by selling cheap hardware. Apple is patiently waiting for time when purchasing power of young population in India is going to be like that of China, where most people who can afford to buy an iPhone can also spend on services . Till then, Apple will always want people in it's next biggest market (India) to perceive that owning an Apple product is symbol of power, luxury and excellence. Currently, even if Apple prices their phones somewhat lower (than what are they today) in India right now , they will not only miss out on profit margins but also won't get people who can afford to spend on subscription based services on it's platform. 

Due to a 5 year long software support and many Indians preferring Apple's age old hardware over latest tech in similarly priced Android phones, Apple is able to sell their very old models in India for many years. This gives it a good opportunity in highly price sensitive Indian market to earn surplus from first degree price discrimination .i.e. keep reducing selling price over years to make product come under purchasing power of more people.  

Talking about challenge in post's title, the challenge is not to compete by putting up a android phone with this year specs and design but to do same as what Apple did with its iPhone 8.  Android OEMs stand no chance to accept this challenge because they know they won't be able to sell one-tenth of sales of this iPhone since they will be competing in vast pool of latest spec'd Android phones.  

FEATURE PHONES : STILL ALIVE, BUT WHY ?

Nokia Banana phone
 Source : theverge

First of all, let's get some recent fact and figures out of the way...

According to Counterpoint Research, global feature phone shipments increased 3% annually reaching 112 million units in Q-3 of 2018. Global feature phone shipment grew consecutively for four quarters from Q-4 2017 to Q-3 2018 whereas smartphone market experienced a small decline in global shipments during the same period. 

Here is a graph depicting the contrast in shipments between smartphones and feature phone markets.

Image source: counterpointresearch

Where does sale of feature phone comes from?

Around 90% of feature phone market is in Asia and Africa. More specifically, Middle East and Africa (MEA) and India account for more than 70% of feature phone global sales. 

Reliance Jio created disruption in feature phone market with introduction of Jio Phone and Jio Phone 2, which drove global sales of feature phones in Q-1 and Q-2 of 2018. In Q-3 2018, Jio phone sales slowed down in India after the initial hype surrounding Jio phone of effectively free price tag. MEA emerged out to be the largest feature phone market owing to shipments growth rate of 32%.

Still wondering...How and why feature phones make a sizable and relevant market?

Affordability

There are still millions of low-income people in developing nations with basic phones. An upgrade from a basic phones to feature phone puts much smaller burden in pockets of these consumers as compared to an upgrade from feature phone to smartphone. Due to high purchase cost of smartphones, feature phones dominate smartphones in poor developing parts of the world. 

Ease of Usability

The problem with majority of old people is that they are very slow and reluctant in learning new things. Features phones have limited options, thereby making it much easier to learn to operate as compared to a smartphone. When compared to smartphones, one of the most compelling attributes of feature phones which makes it the best option for needs of old age people is big battery life.

A longer battery life is also particularly useful for people living in developing countries where a large population has no proper access to electricity and people are often dependent on charging stations.

4G Revolution

Just like smartphones, features phones are also now available with option of 4G connectivity. These 4G enabled feature phones are a compelling upgrade option for already existing feature phone users because they act as affordable option for these these low-income consumers to experience internet for the very first time. Partnership of Kai Os with feature phone OEM's has also brought several useful apps on these 4G feature phones like Whatsapp, Facebook, Youtube and Google assistant, which were smartphone exclusive some years ago.

         

BLACKBERRY KEY 2: WHERE IS THE KEY???

If you are unaware about Blackberry's comeback, here is a quick info-

After vanishing into thin air due to stiff competition from Android and iOS, Blackberry came to life when it entered into long-term brand licensing agreement with TCL Corporation and Optiemus Infracom. According to this hardware licensing partnership, Optiemus Infracom holds the right to produce Blackberry-branded smartphones in India, Bangladesh, Indonesia, Nepal and Sri Lanka while TCL everywhere outside these nations.

Blackberry KeyOne release in early 2017 followed by Key2 in mid 2018 laid the foundation for comeback of Blackberry mobiles.

Source:- https://blackberrymobile.com/storage/2018/03/03-1.jpg

I grew up in years during which phones got from being big and practically non-portable to small, everyday and everywhere devices. This post is written by a guy who never got a chance to own and use a blackberry mobile phone until December of 2014. This was mainly due to two very practical reasons - first me being underage for phone usage during blackberry phone's glory days (yes this was a thing back then, now we have toddlers handling smartphones like a pro) and second one is somewhat even valid till nowadays i.e. their affordability.

Talking about pricing and affordability, BB KeyOne came with launch-price tag of $549 and Key2 with an increment of $100 to the previous one. Well at-first pricing seems to be kind of okay, considering the fact that both of these are blackberry's flagship devices, and even more when we have Samsung and Apple breaking $1000 price ceiling with their latest flagship pricing. Until you look at specs-sheet, which looks like that of a mid-grade phone rather than a flagship device and totally unacceptable for launch price tag of phone. We have devices with same internal hardware specifications, costing less than half the price.

Well at this point, one might argue that Blackberry has always been a software company with security at it's core values and has been providing those services with in-built features in their phones. So aren't they charging premium price for those services which make Key2 the most secure Android device available for masses to purchase. Yes, this can certainly be one of the explanations.

Blackberry's target consumers consist of people who really need high level of security provided by their devices and a small group of rich nostalgic tech-savvy people. This is the case because all other people not listed above are far better-off buying some other phone in same price segment like that of Oneplus.

Considering the fact that people who sincerely require that high end level of security are the one that can carry only one device and are rich enough to spend on security (top-officials). These people are generally willing to have excellent end user-experience, which is lacking in both KeyOne and Key2.

Blackberry can take advantage of it's unique position of being one of the very few companies to cater to such an audience, especially in Android domain. They can provide better overall experience by having the best in class hardware available in their upcoming devices and launch them with even a higher price-tag than it's predecessors.         

Increasing the launch price, can deter other people to make a purchase. This situation can be handled by having a more affordable option, which Blackberry tried to do by having another model named Key2 LE. With lower price-tag of $400, Blackberry Key2 LE still can't be called an affordable and certainly not a value-for-money option in emerging markets like India, where there are phones with excellent price to performance ratio in $200-$300 price range.

When Blackberry was in it's glory days, people did not buy blackberry just because of baked-in high level security features but due to simple fact that a blackberry phone was host of very well implemented smart features found during those days (especially that tactile physical keyboard and BBM). Unless Blackberry comes out with a compelling option, people will find it hard to buy and recommend a blackberry. While Blackberry's USP (unique selling point) i.e. in-built security features might not be as desirable among audience as compared to other brands. Blackberry can still make a comeback with offerings that are justifiable for their launch price. 

JIO PHONE 2 & JIO PHONE'S SUCCESS : STRATEGY EXPLAINED

Jio's Strategy and Success of Jio Phone 

Not just like any other feature phone launch, which goes unnoticed, the launch of Jio phone created quite a buzz across the globe. This was partly due to fact that it had handful of smart features but mostly due to it's effectively free price tag.

Jio phone plans

Before the launch of Jio phone , there was market base of more than 400 Million 2G subscribers in India. And as you might have guessed they were mostly on old feature handsets. Considering such a huge consumer base who would be happily willing to switch to 4G network, these potential users were let down by two factors -No such 4G enabled feature phone availability and high prices for 4G services which were definitely not affordable for people still on feature phone. 

If Jio would have just lowered down prices of plans for feature phone users, this would have let to a creation of demand for 4G enabled feature phone, only to be absorbed by players like Micromax, Intex and Nokia. It would have created another problem for Jio i.e. Users might have switched to some other telecom service provider like Airtel and Vodafone.

The aim of Jio was to lock down it's potential new users into Jio ecosystem as it will help them start a new stream of revenue. Launching Jio phone not only made Jio realize this goal but also absorb the demand that would have got created, just as previously done by launching Reliance Lyf brand of affordable smartphones at the time of launch of Jio internet services. 

And for those who think INR 1500 deposited in form of what Jio calls as security deposit is refundable after 3 years, there is clear mention that it is gonna happen only if Jio phone users get recharge done each and every month for 3 years. It is highly unlikely that anyone would be living with this hardware for so long.

So with a clear objective of capturing feature phone market share, Jio till now has been quite successful in it. As of July 2018, Jio phone had a market share of around 47% in Indian feature phones market. In the first quarter of 2018, Jio phone had global market share of around 15%. What's even more impressive is the fact that this feat of becoming global leader in feature phone market was achieved by Jio phone in just 10 months.

Jio Phone 2

Second generation Jio phone or as they call it Jio phone 2 can be seen as an iterative version of Jio phone. It comes with a few improvements and more importantly these improvements address some of the biggest problems of first generation Jio phone. 

Jio phone came with a standard T9 keyboard layout, which made providing any input to phone very cumbersome. Jio phone 2 improves on it by having a standard QWERTY layout for keyboard. This makes typing experience much better especially in apps like Whatsapp and Facebook.

Watching YouTube on Jio phone was never a fun experience. Thanks to Jio phone 2, the screen aspect ration has changed and now the screen is much wider making video watching experience much immersive.
Jio is asking you to hold them $43.69 (3000 INR) for a brand new Jio phone 2. 

Though Jio phone 2 provides some functional improvements over it's last model. It will not make much of a difference when it comes to overall experience as they have not improved on the most important aspect of a feature phone like Jio Phone i.e. voice input.

What people don't understand is that adding INR 2000 more can get them a decent Android smartphone like Nokia's Android One phone. I am not saying that it's gonna be lag free experience but still far better than what Jio phone 2 has to offer, especially considering the fact that target audience for Jio phone are feature phone users. 

JIOPHONE : REALLY A SMART FEATURE PHONE ??

By now it's high chance that you would have come across some article on internet or at-least a post on social media taking about Jio phone. For those who are still unfamiliar, it's somewhere between smartphone and a feature phone, you can call it a hybrid because it packs some features of a smartphone in body of a feature phone.

Jio phone

My experience

Keeping it straight and simple, this review comes from someone who gets all possible work done on a smartphone. So, as expected I was really annoyed by the fact there is no good voice input and you have to rely on that crappy keypad in many apps to do so.

Keypad on Jio phone

The keypad experience was worse than I expected. I had to press a key multiple times to register an input. To be sure that it is not a problem with my unit, I got my hands on another unit and still faced the same problem. It is quite unfortunate that Jio phone suffers from this issue cause it spoils the whole experience of navigating and interacting with device, though software was kind of okay. There were even times when I gave upon it's User Interface.

Cameras on this thing are perfect example of you get what you pay for. They are really very bad and what else one can expect from phone at this price point. I honestly think they should have provided a better front camera (for better video calls) at the expense of rear one cause anyway not even 20% of people are gonna use it for taking pics.

Two very strict requirements for decent video calls are that internet speed should be very good at your location (which is still a problem at many places) and you must be in very well lit environment.

Though Jio phone was released around an year ago in August of 2017, it is yet (as of when this post was published) to receive an update for WhatsApp and YouTube. As per company's announcement, it is expected to get these features starting from 15th August 2018. It might also get Google maps after YouTube. Other applications on Jio phone like Facebook and Jio apps work just fine when internet connectivity is good. As of now, voice input is limited to opening apps, making calls, sending messages and Google search on Google assistant.