Reliance Retail cut prices of its latest Lyf-branded 4G voice over LTE (Volte)-enabled smartphones – Flame 3, Flame 4, Flame 5 and Flame 6 launched over a month ago – by 25 per cent to Rs 2,999, a move that industry experts said would put pressure on Indian smartphone makers seeking to retain market share amid intense competition.
“This will definitely spur competition and Indian players may be forced to cut prices,” said Tarun Pathak, a senior analyst at Counterpoint Technology Market Research. “But they shouldn’t because they don’t have the same revenue model as Lyf, which has the phone bundled with voice and data services.”
Lyf buyers typically get a Reliance Jio Infocomm SIM card with voice and data services, similar to carrier bundling. The phones can also be operated with services from other telecom operators.
Indian companies including No. 2 Micromax Informatics and No. 3 Intex said they would watch the market reactions to Lyf ‘s newest phones before taking a call on prices, while Karbonn Mobile said it won’t drop prices.
The companies already compete with aggressive rivals from China and any price drop will further hit their 2-3 per cent margins. Low-cost smartphones are considered key in propagating the wider adoption of technology in India, with experts pegging Rs 3,000 as the inflection point for broader acceptance of 4G.
The price bracket of Rs 1,600-6,600 made up over 40 per cent of the smartphone market by volume in March. Of this, half were in the Rs 5,000-6,600 range. All Indian handset makers have a large presence and play aggressively in these key price segments.
Counterpoint had predicted 4G phone prices would fall to as low as Rs 3,000 by the year end.
The average selling price of 4G LTE phones dropped to Rs 11,500 by June-end from Rs 14,500 in the quarter ended December. Before the latest Lyf phones, the cheapest 4G phone cost Rs 3,500, compared with Rs 4,666 six months ago, it added.