Reliance Jio's LYF branded handsets' market share shrinks to 2.5% in Q1

Analysts feel Jio may now enter the VoLTE feature phone segment

The onslaught of China-based vendors has not only displaced Indian handset companies but also dislodged Reliance Jio-owned 'LYF' brand from the top five smartphone brands in the country.

Going by the numbers shared by Counterpoint Research, the market share of LYF smartphones has been reduced to 2.5 per cent in Q1 of 2017 as against the high of 6.9 per cent in Q3 of 2016.

In Q3 of 2016, LYF became the fourth largest smartphone brand in the country. However, after that, LYF has seen a slide in sales mainly because all the vendors have migrated to VoLTE (voice over LTE) enabled devices across all price ranges.

Analysts Business Standard spoke to said LYF should exit the smartphone segment and start targeting the VoLTE feature phone category.

As per IDC, in the first quarter of 2017, China-based vendors captured 51.4 per cent share of the smartphone shipments in India with 16.9 per cent sequential growth and impressive 142.6 per cent growth over the same period last year.

In contrast, share of homegrown vendors dropped to 13.5 per cent in the Q1 2017 from 40.5 per cent in Q1 2016 and 94.5 per cent smartphones shipped in Q1 2017 were 4G-enabled .

"LYF's branded smartphones got a major push mostly being an exclusive entry to Jio's preview offer during mid-2016. But later the offer was extended to other smartphone brands and LYF branded smartphones lost their exclusivity post which it was only the price point which remained attractive for some users. However, excess SKUs and without any solid differentiation, LYF branded smartphones could not offer anything new which existing brands are already offering in the market," Tarun Pathak from Counterpoint Research told Business Standard.

He added that close to 34 models were launched within a year and none of them could become a hero model generating enough scale for LYF.

"Now players like Xiaomi entering sub Rs 6000 with Redmi 4, it will be difficult for LYF to generate scale without a unique or bundled offering which it can easily do with the upcoming Jio ecosystem in place. Hence, it need a smart marketing ploy to get LYF devices back on demand which are likely to face a tough competition in open market," Pathak said. IDC analyst

Jaipal Singh said smartphone ecosystem has already moved to 4G and as on Q1 2017, 94.5 per cent smartphones shipped in India were 4G enabled and mostly supports the VoLTE technology.

"In contrast, majority of the feature phones are still on 2G network and doesn't support Jio network. One of the objectives of launching "LYF" smartphones by Reliance Jio was seeding the market with VoLTE enabled devices across all price ranges to appeal a wide range of customers. Since the launch of "LYF" all vendors have migrated their majority of smartphone portfolio to VoLTE enabled devices, it makes sense that they should exit this segment," Singh said. Singh further said that while India's 2/3 users are still on 2G feature phones, it is necessary that Reliance should now target on feature phone devices and support the segment until it migrates to 4G enabled devices.

"Going forward we can expect Jio to enter into new segment, VoLTE featurephone, to target users in rural India to arrest the decline in volumes," Pathak from Counterpoint noted.