Reliance-Google smartphone deal in India threatens Chinese firms

NEW DELHI: A $4.5 billion deal under which Alphabet's Google will collaborate with India's Reliance Industries on a new smartphone likely heralds a big shake-up for the world's second-largest mobile market, industry executives and analysts say.

Reliance boss Mukesh Ambani, announcing the partnership at his company's annual meeting last week, said Google would build an Android operating system (OS) to power a low-cost "4G or even 5G" smartphone that Reliance would design.

The new phone is set to pose a major challenge to Chinese vendors such as Xiaomi (1810.HK) and BBK Electronics, owner of the Realme, Oppo and Vivo brands, which currently dominate a $2 billion market for sub-$100 smartphones in India.

Powered by a clever mix of Bollywood, cricket-driven marketing and product features such as powerful cameras, the Chinese firms sell roughly eight of every 10 smartphones in the country.

"If history is anything to go by, Reliance will undercut other brands and pose a real threat to the low-end smartphone market," said Rushabh Doshi of tech researcher Canalys.

Reliance executed a similar plan in 2017 with the launch of the JioPhone, a no-frills device that gave users internet access for as little as $20. JioPhone now has more 100 million users, many of whom are internet first-timers.

"They (the Chinese players) are likely to cut their price to compete and their margins could shrink," said A Gururaj, the former India head of contract manufacturers Wistron (3231.TW) and Flextronics. "I see the Google-Jio phone as a big hit."

Reliance's ambition to hand a smartphone to every Indian could also win subscribers from telecoms rivals Vodafone Idea and Bharti Airtel, who still have hundreds of millions of users with old-style feature phones on basic 2G networks.

Realme declined to comment. Reliance, Xiaomi, Oppo and Vivo did not respond to requests for comment.

Vodafone Idea and Bharti Airtel did not immediately respond to requests for comment.

The alliance will see Google invest $4.5 billion in Reliance's digital unit, which houses telecoms and fibre

businesses as well as music and movie apps.