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Indian brands are collateral damage in the local handset war. Mukesh Ambani, the country's richest man, unveiled a basically free internet-enabled model this month with much nationalistic fanfare. The JioPhone, designed and assembled domestically through his flagship Reliance Industries, will help bridge the country's digital divide. Using this and other devices, around half a billion Indians will come online in the next five years in what is already the world's third-largest smartphone market by handsets in use. Rapid uptake of Ambani's phone will add to the pressure on local rivals.
India had about 650 million mobile users last year, of which just over half still used no-frills feature phones, Counterpoint estimates. Local brands, which are privately backed and include Micromax and Lava, have a larger share of this lower-end market than of the more expensive smartphone business. Ambani's offering will eat into the upper end of this segment.
Meanwhile, Indian players are already struggling at higher price points. They have lost market share as slowing domestic sales have pushed Chinese brands such as Oppo and Vivo to move overseas aggressively. Counterpoint research also shows that Indian brands made up just 16 percent of local smartphone shipments in early 2017, down from 49 percent less than three years earlier. The JioPhone could take from the lower end of this segment too.
Outsiders have been so successful because, unlike Indian players, they also tend to be manufacturers and do more of their own research and development. That means they can innovate faster. The scale of the Chinese outfits, which have a firm grip on their home market, means they also have more money to throw at advertising. And Chinese handsets are seen as better quality than Indian ones, at least until customers can afford handsets from Samsung or Apple. Existing handset-makers will hope Ambani is only hungry for subscribers for his recently launched Reliance Jio network, which is already the largest high-speed service in the country, and that he is unlikely to be a long-term rival.

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