World's cheapest smartphone Freedom251 hits India; industry skeptical

NEW DELHI: The world’s cheapest smartphone, Freedom 251, has hit the Indian market at an unheard of price – Rs 251 or below $4 – making the Android-operated device attractive, although some handset industry experts and analysts were sceptical and even called it a gimmick. Noida-based Ringing Bells, set up last year, launched the ultra-affordable 3G smartphone hoping to catalyse sales and help bring millions of Indians online in the world’s secondlargest market, after China.

“We’re looking to corner a 40% market share in 12 months from now,” Ringing Bells president Ashok Chadha told ET. “The vision is not to be making any avaricious margins, but to make them reasonable so we sustain ourselves and give back to the customer the true value.” South Korea’s Samsung Electronics had a 27% share of India’s smartphone market in the quarter ended December, followed by Micromax Informatics. Indian handset makers and telecom analysts said just being cheap won’t get them far and that a 3G smartphone with specifications offered in the Freedom251 would cost a minimum Rs 2,000 or $30.

“Rs 251 for a 3G smartphone is economically not possible, it’s not sustainable. This appears to be a marketing gimmick, if they aren’t supported by the Indian government,” said Tarun Pathak, a senior analyst at Counterpoint Technology Market Research.

“There is no known model of a subsidy like this that a Rs 4,000-Rs 5,000 phone can be sold atRs 251,” said Pankaj Mohindroo, president of the Indian Cellular Association. “If there is something shrouded in secrecy or non-transparency, then the appropriate authorities will get to bottom of this.”

The Indian Cellular Association has written to telecom minister Ravi Shankar Prasad, saying the IT department should go into the depth of the issue, adding that the price could not be below Rs 3,500, even after it is subsidised. ET has seen a copy of the letter. The company will pass on benefits from margins, duty exemptions for local production, savings from selling online and efficiencies from economies of scale and logistics to consumers, Chadha said. Pre-embedded apps in the device may lead to revenuesharing arrangements. “I’m not making losses.

We will be making everything of the phone in India, except the chipset,” Chadha said. Ringing Bells said it has prepared an initial lot of 5 lakh to 10 lakh phones for the first go. Chadha did not mention delivery dates for the device. “We’re also talking to e-commerce companies to make it available online,” he added. Founded last year, Ringing Bells has already launched 4G smartphones priced at Rs 2,999, along with two feature phones.

Mohit Goel, the promoter of the company, has had a family business of agri-commodities in Uttar Pradesh for more than 36 years. Ringing Bells will rely on the promoter’s reach into dealer and retail channels for selling the phones. The company aims to spend a minimum of Rs 250 crore on full indigenous production of the phones.

“We’re looking to set up four to five modular plants in the country in different states and talks are on. We are waiting for GST to be announced. We will invest in buckets (tranches) ofRs 250 crore,” Chadha said.

Even Datawind, which produced Aakash, the $35 tablet launched with much fanfare by the previous UPA government, was sceptical. The downright-cheap strategy worked only to some extent. “We are unable to offer a Rs 251 product at the specs they’ve offered unless it is a donation,” said Suneet Tuli, CEO of Datawind.

“We will have to figure out how to compete if this is more than a marketing promotion or some kind of subsidy.” The design of the user interface of the device is borrowed from Apple’s iPhones, including the home screen icons and circular home button. Analysts said people in India don’t need ultra-cheap devices and would rather seek for value for money.

“People will surely buy it, but if the experience isn’t good it will meet the fate of Firefox OSbased smartphones launched by Intex and Spice,” an analyst said. Firefox pulled the plug on its $35 smartphone programme last year after launching it in 2014. The Freedom251 has a 4-inch display, 1.3 GHz quad-core processor, 1GB RAM, 8 GB internal storage (expandable up to 32 GB), 3.2-megapixel back camera, 0.3-megapixel front camera, and a 1450mAh battery. It will be sold on the company’s website – Freedom251. com – from 6 am on Thursday.