Jio Platforms – The Bollysystem 2.0 pt. II

Jio and Google fragment the Android platform.

• Jio Platforms is redoubling its efforts to capture the Indian market for new digital services while ceding the traditional ecosystem to Google and Facebook.
• The real loser here is Kai OS which was the software and ecosystem that was on the original Jio Phone but it has now been replaced with an optimised version of Android 10.
• The new device is called the Jio Phone Next which is believed to be targeted to have a price point of less than $50.
• The only way that it is possible to make this price point and still offer a decent user experience is to “optimise” Android which in reality means to fragment the platform.
• Essentially what Google has done with Jio is create a slimmed-down version of Android that will run very well on lower-cost hardware in a clear contravention of everything it forces the Android handset makers to sign up to when they license Android from Google.
• Support for high-end hardware, features, and so on will reduce the memory, storage, and processing power required to run the device with an acceptable level of performance which is how one can achieve the price point.
• I suspect that the switch from KaiOS (which was non-android) with a KaiOS app store to Android is all about Google maintaining the means of app distribution.
• This makes Jio phones proper Google Ecosystem devices as opposed to KaiOS ecosystem devices that can also run Google apps.
• Being Android-based means that the much wider range of apps on Google Play will also run on the devices although a large number of them will have very poor or no performance given the constrained hardware that they are running on.
• This is the foundation upon which Jio intends to build with its content, commerce, and messaging services which I suspect will soon become much more.
• When one looks at what Jio offers and what I suspect it is planning to offer, none of it competes directly with either Facebook or Google.
• This makes sense as both Google and Facebook have invested substantial amounts of money in Jio Platforms which they would have been less likely to do if Jio Platforms was going to compete directly with them.
• The closest competition is YouTube and Jio Cinema / TV+ and while these are both aimed at Media Consumption, the nature and monetisation of the content in both instances are very different.
• In fact, I do not expect Jio Platforms to compete very much on the Digital Life Pie at all and instead, I think it will concentrate on other services where Google and Facebook do not really operate.
• This will include things like content sales, e-commerce, financial services, e-health, education, and so on.
• These are services where the usage of the device for Digital Life services opens the door to offering other uses of the smartphone to the user.
• Using Android rather than KaiOS will make it easier for Android developers to ensure that their services are also available on Jio Platform’s devices.
• This will eliminate any disadvantage real or otherwise that Jio Phone owners might have felt that they had in using a KaiOS device upon which not all Android apps were available.
• Creating low-end Android devices has been tried many times before and it has never worked, but this time Google is much more deeply involved and it is only on one device initially.
• Hence, the aim now will be to entice feature phone users (such as KaiOS) to become smartphone users which will enable a better user experience and also open up the possibility of Jio Platforms expanding outside of India.
• Jio Platforms currently has 426m users which is more than enough to create a thriving ecosystem supported by Facebook and Google but large numbers of these are inactive and the ARPU is very low at $1.85 a month.
• This looks encouraging on the surface but the real issue is going to be the price of the device as Android devices with this kind of price point have historically offered awful performance.
• This is where fragmenting the Android platform may help as the software can be optimised for this price point but if it breaks too much compatibility, the ecosystem will suffer.
• This is the balance that Jio Platforms needs to strike but seeing as it now has Google in its corner helping it to fragment the Android platform, perhaps this time cheap Android might work.
• Given the $58bn valuation ($145 per subscriber) at which Google and Facebook invested in Jio Platforms, it needs to be a smashing success.
• If things stay the way they are, Google, Facebook et al will be waiting for 350 years to break even.