Monday, February 12, 2018

Jio is Succeeding at "Destroying" the India Mobile Market

By now, telecom executives are well aware of the “disruption” market strategy, whereby new entrants do not so much try and “take market share” as they attempt to literally destroy existing markets and recreate them.

Skype and VoIP provider one example. The “Free” services run by Illiad provide other examples. Most recently, we have seen Reliance Jio disrupting the economics of the mobile market in India, offering free voice in a market where voice drives service provider revenues.

“Free” is a difficult price point in most markets. But free voice forever is among the pricing and packaging foundations for Reliance Jio’s fierce attack on India’s mobile market structure. “Free voice” does not only lead to Jio taking market share, but reshapes the market, destroying the foundation of its competitor business models.

At the same time, Jio hopes to become the leader in the new market, driven by mobile data, with far-higher usage and subscribership, and vastly-lower prices.

Disruption really is the strategy, not “take market share.”

RJio says it will reduce tariffs by another 20 percent whenever a rival matches its offer. You might guess at what will happen. Competitors will drop tariffs, but not to match Jio’s offers exactly, as that will simply trigger another deep discount in retail pricing that depresses revenue for virtually all service providers.

At the end of 2016, Reliance Jio did not appear as a market share leader. Some seven months later, Reliance Jio had taken about nine percent share, and kept growing. By the second quarter of 2018, Reliance Jio might have 14 percent revenue market share.  

Where Jio really dominates is in mobile data, where Jio represents about 94 percent of mobile data usage and 34 percent of mobile data accounts.  

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