Apple makes proprietary hardware packaged on exclusive software. But increasingly, the business model has moved from the hardware to “services and solutions” within the ecosystem. That is the reason we do not read that much on the number of iPhone and iPad sold these days. If that remains, Apple’s future to win those services and solutions space will mean more users, and not necessarily selling fashionista and expensive hardware. So, Apple needs to have numbers.

 So, the new playbook Google is unveiling which is to make cheap 5G phones with India’s Jio is a first shot on the battle for the soul of 5G: “India’s telecom giant Reliance is working with Google on a $25 billion plan to develop affordable 5G smartphones and services, the company said on Monday.”

Do we expect to have a cheaper version of iPhone for the 5G era as the company looks for ways to deal with Google’s plan to flood the future with ultra-affordable 5G phones?

Reliance Chairman Mukesh Ambani said during the company’s annual general meeting that Jio’s 5G network, which will be launched starting with New Delhi and Mumbai before being expanded across the rest of the country by next year December, will be the world’s largest.

The plan, which is the latest in the company’s efforts to disrupt India’s telecom market, is expected to be executed in two months. It has a promise of crashing the cost 5G devices in India, making it “ultra-affordable”.

“To take the 5G mass market, a sub-$100 phone is imperative and Jio is rightly positioned to bring 5G to the masses,” Reuters quoted Neil Shah, vice president of research at Counterpoint, as saying.

Certainly, not many will care since the iPhone is a fashion symbol besides being a great device. But if Google attacks from the bottom, many will not ascend into the higher iPhone. More so, Apple is pushing Apple Pay to the developing parts of the world. The implication is that it will need users in those regions to buy into the Apple Universe to make use of Apple Pay.

Comment on Feed

Comment 1: Trends change quite fast in the telecommunications age. That said, Apple seems to still have a safety net in the sense that it’s products are seen as status symbols. However betting on quality low price products is usually nearly guaranteed to win. For now my belief is that Apple has the numbers, in the sense that those who own their products can also afford most of the services that they offer. Their only worry is that markets evolve and if Google collaboration with Rio is successful be sure with time they will offer whatever services that Apple is offering now. Anyway 2 organisations cannot produce enough for the world. Expect Chinese companies to bulldoze their way into the 5G products market soon.

Comment 2: This is a grt entry model for Google into the 5G arena using one of the largest markets for this roll out. I challenge MTN to glean some initiative from this and maybe partner with TECNO to replicate similar feat for the largest black market on earth (Nigeria), spreading same across Africa.

My Response to 2: Indeed, it would be amazing if that can happen. If they do contract payment where payments are spread over months, a telco can execute that in Nigeria.

Comment 3: Ndubuisi Ekekwe there’as always been cheap smart phones and there will always be cheap smart phones, and apple will continue to be a market leader in its category (hardware and service). Unlike Samsung and Google, Apple continues to thrive by adopting a “Focused Differentiation” strategy (Bowman’s strategy clock)

My Response 3: Absolutely, I did note that. Yet, in the world of services, that strategy while great will not last forever. If because of your premium hardware, India cannot connect into your services, you are scoring an own-goal. Apple has to make that decision. 5G presents a transition phase and could create a dislocation especially if Apple comes with very expensive iPhone.

India’s telecom giant Reliance is working with Google on a $25 billion plan to develop affordable 5G smartphones and services, the company said on Monday.

Reliance Chairman Mukesh Ambani said during the company’s annual general meeting that Jio’s 5G network, which will be launched starting with New Delhi and Mumbai before being expanded across the rest of the country by next year December, will be the world’s largest.

The plan, which is the latest in the company’s efforts to disrupt India’s telecom market, is expected to be executed in two months. It has a promise of crashing the cost 5G devices in India, making it “ultra-affordable”.

“To take the 5G mass market, a sub-$100 phone is imperative and Jio is rightly positioned to bring 5G to the masses,” Reuters quoted Neil Shah, vice president of research at Counterpoint, as saying.

Reliance Jio, which owns the largest share of India’s telecom market with more than 420 million subscribers, beat competitors to clinch airwaves worth $11 billion in a $19 billion 5G spectrum auction earlier this month.

Jio has deployed ‘price-crashing’ as a playbook to win market shares since 2016, when it launched cheap 4G data plans and free voice services. The playbook was also used by the company when it partnered with Google to introduce an $81 4G smartphone.

India has the second largest telecom market in the world, but about 700 million people still don’t own smartphones due to cost. Thus, the key to putting more smartphones in people’s hands lies largely in making it affordable.

Nigeria’s similar situation

In Africa where Nigeria has the largest telecom market, the cost of 5G devices poses a threat to successful rollout of the fifth-generation services.

In an interview with Punch last month, Vice President, Global Telecommunications Industry, IBM, Craig Wilson, pointed at the affordability of 5G devices as the biggest threat to successful rollout of 5G services in Africa.

He said that although some device manufacturers have committed to bringing costs down to around $150, the cost of a 5G device currently runs around $350, making them unaffordable for many.

“Still, many industry analysts believe that 5G devices need to be at about $50 to support mass adoption across Africa. The high cost of 5G phones is a major impediment, and it impacts the launch the fifth generation network on a commercial scale when there are not enough mobile devices capable of receiving it,” he said.

MTN Nigeria, the leading telecom company in the country that has just kicked off its 5G rollout, is caught in the challenge of unaffordable 5G devices.

MTN and Mafab won the 3.5 gigahertz (GHz) spectrum auction for the deployment of Fifth Generation technology in December 2021.

Nigeria has a population of more than 200 million people with only about 40 million estimated to own smartphones. To fill this huge gap through 5G rollout requires availability of affordable 5G devices.

With the success of the rollout in Nigeria depending much on making low-cost 5G smartphones available, MTN may need to copy Jio’s “ultra-affordable” plan.

Markets are vector quantities with magnitude (market size) and direction (customer preferences). Unless your products evolve and adapt, you will remain a scalar quantity (only magnitude with no antenna to pick the directional patterns from customers). Today at Tekedia Institute Mini-MBA Live, we will have a conversation on Winning in Markets, in this last week of edition 8.

Every business model begins with an assumption on knowing and understanding the customer frictions with capabilities to provide products and services to fix them.

But most of the time, those assumptions must evolve. And that means, the greatest companies are those that have mastered the art of adaptability because the needs of customers change. Understand. Adapt. Win.

At Tekedia Institute, we are understanding the physics of business and how to drive momentum in company growth. Join us for the next edition which begins Sept 12 here. 

Cost remains N90,000 or $170 for the 12-week program which has both pre-recorded and online, all remotely executed. Rated “E” for everyone with secondary school education.