Docoss X1 and Freedom 251 by Ringing Bells are two really cheap smartphones — at least on paper — that have managed to grab attention in India. Docoss X1 costs Rs 888 and offers 4-inch display with 1GB RAM with 4GB storage (32GB expandable), a dual-core processor, Android 4.4 KitKat, a 2 megapixel camera and a 0.2 megapixel front camera. It has a 1300 mAh battery.
Freedom 251 by Ringing Bells was priced at Rs 251 and offered a 4-inch WVGA resolution display, features a 1.3 Ghz quad-core processor, 1GB RAM, 8GB total storage space and a 3.2 megapixel camera on the back. Both the companies share not just the ridiculously cheap pricing, but also the fact that they were both unknown till these products were announced.
While people who managed to book a Freedom 251 are still waiting for the phones to be delivered, Docoss X1 has tried to quell doubts by putting out hands-on videos and photos on its social media channels, which doesn’t really mean much.
In fact, there are unconfirmed reports that Ringing Bells too might actually start deliveries soon. So far all the world has seen in Freedom 251’s case are review units, which were actually re-branded devices from AdCom.
The main concern for many remains the super-low pricing. At the time of the Ringing Bells Freedom 251 launch, we had reported that the mobile industry could not accept the Rs 251 price tag and there are several good reasons for this.
For starters Indian Cellular Association (ICA) president Pankaj Mohindroo had told IndianExpress.com at the time of the Ringing Bells launch that this “pricing is not possible under any circumstances, even if the components are made in India”. He said the bill for material for a product like this would be around $40.
If you look at the specs of the Docoss X1, which is pretty similar, and assuming that the $40 bill sticks, the price comes to around Rs 2,600. In such cases, even the Rs 888 price-tag raises some serious questions.
As we had explained earlier, phones usually have a bill of material (BoM) cost on top of which comes the manufacturing cost, plus components like taxes and duties, and marketing cost and profits — together making up the final selling price. In offline sales at least, the dealer has a considerable margin — which is why you see large variations in prices of the same product. Of late, the trend has been to subsidise this figure to capture markets, especially India. In the BoM, usually the cellular radio is the costliest — making up about 30% of the cost. With the processor and rest of the circuit, this could go up to 50%. The mechanical parts come next, followed by display, storage/memory and the camera component.
Analyst Sanchit Vir Gogia, CEO & Founder at Greyhound Knowledge Group, had told us at the launch of Freedom 251, that the lowest price point seen so far on a smartphone was $ 28, or about Rs 1,700. Docoss X1 and Freedom 251 are both considerably lower than this price-point.
So what are Ringing Bells and Docoss playing at with this impossible pricing? Someone who has been in this industry for many years, says the kind of publicity a cheap phone gives is unparalleled. And as we have seen with the Freedom 251, the interest among the public was unprecedented. So burning some money to subsidise and deliver a few thousands, or just a hundred-odd devices, might be worth it in the long run as it will help create brand recognition like no ad campaign can.
Also, even if someone decides to sue you for inability to fulfill orders or quality of service, you just need to pay the price you charged for the device for a settlement. It might not be bad business after all.
However, the worrying issue is how companies are using the Make in India campaign to promote products that are made abroad. The government has to crack down on misuse of this label if it has to be taken seriously.