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Google reportedly spending $1Bn to subsidize & market Android One phones in India

Android One

(By Riddhi Mukherjee & Vikas SN)

It looks like Google is planning a big marketing campaign for its Android One smartphone initiative, that was introduced in Google I/O last month.

The company has told its potential partners that it would be spending closer to $1 billion dollars to promote these phones starting later this year, according to a source-based The Information report (subscription required). This will include subsidizing the smartphones to get them under the $100 price range.

An The Economic Times report also cites sources to suggest that Google will be spending more than Rs 100 crore with its partners on advertising and marketing these Android One smartphones.

It notes that these phones would be launched around Diwali period (October) in the country, when Google’s Senior vice president (Android, Chrome & Apps) Sundar Pichai is expected to visit India. We had earlier anticipated an October launch since the handset sales are typically very strong during the Diwali period. 

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Why Android One is significant for Google?

This initiative will be very significant for Google to increase the penetration of Android smartphones in the country. As we stated earlier, this program has the potential to significantly change the existing handset market in India for good.

While we do have sub-$100 smartphones in the market, these phones typically are lower-specced, hence providing users with a sub-par experience. With this initiative, one could expect decent entry-level smartphones (hopefully Moto E-like devices) at prices below Rs 5,000, which could significantly drive the smartphone penetration in the country.

As per the latest IDC report, the smartphone penetration in India was only 10% in Q1 2014, although the smartphone shipments has apparently grew by over 186% year-over-year. What’s even more interesting is that 78% of these smartphone shipments were apparently sub-$200 smartphones.

Earlier this month, Flipkart CEO Sachin Bansal had claimed that it had sold one million Motorola phones in the five months, since Motorola’s re-entry to the Indian market in February this year. If this is any indication, then Android One phones with an affordable price tag could possiblly be a big draw for Indian users.

The biggest loser in this battle would probably be Samsung, which is still the largest smartphone player in India but is reportedly struggling to maintain its growth in the mid-range and high-end smartphone segment. The company has also had a love/hate relationship with Google over promoting its own services and subsiding Google ones in its Android smartphones.

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Celkon signs up for Android One; Intex & HTC in talks

Google has also roped in Indian low-cost smartphone maker Celkon Mobiles for its Android One initiative, reports The Economic Times. It says Intex Technologies is also in talks with Google for a similar partnership.

Interestingly, HTC president of global sales and chief financial officer Chia-Lin Chang told the publication that it is also in talks with Google for a similar tie-up. Google had earlier partnered Micromax, Karbonn and Spice* for this initiative.

While there isn’t much information on the first set of Android One smartphones, Pichai had mentioned a sub-$100 Micromax smartphone with 4.5-inch screen, dual SIM and SD card support which will probably be among the first lot of smartphones coming from this initiative.

These smartphones will feature stock Android with regular software updates, just like Nexus and Google Play edition devices and the company will also apparently be working with carriers to bundle low-cost data plans with these phones.

In terms of hardware, Google had mentioned that they are working on creating a set of hardware reference platforms, identifying components which can go into a “high-quality next-gen affordable smartphone” and pre-qualifying vendors for those parts so that they can offer OEMs with turnkey solutions to build smartphones. More on Android One initiative here.

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*Disclosure: Spice Digital is an advertiser with Medianama

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