Mukesh Ambani-owned Reliance Retail has bought a 16% stake for around $7 million, in KaiOS Technologies (KTI), the US-based company which provides operating system for JioPhone. Reliance Retail paid around $3.6 for each of 19,04,781 common shares.

KTI is an early stage revenue company, with turnover of $ 9.25 million in 2017 and $ 2.5 million in 2016. KTI’s flagship product ‘KaiOS’ originates from the Firefox open-source project, and enable mobile and IoT devices. The mobile devices are positioned between smartphones and feature phones. According to Reliance, this investment “has potential synergies” with its current investments in affordable digital devices business and its digital services initiatives.

Apart from Jio in India, KaiOS powers phones in Canada and USA through partnerships with Sprint, AT&T and T-Mobile. In total, over 30 million people are already using devices running KaiOS, according to the company’s website.

A recent partnership with Indian mobile manufacturer Micromax will also take KaiOS-powered phones to Sri Lanka and the Middle East, according to media reports. The feature phone is expected to offer virtual assistants, instant messaging apps, and video call capabilities. Nokia has also launched a new version of its iconic 8110 phones, equipped with 4G internet. This smart feature phone will also run on KaiOS.

JioPhone and competition

The JioPhone was launched in July 2017, and within half a year of its launch (by December 2017), it managed to become the top feature phone brand by shipments, overthrowing market leader in the segment Samsung. This is in part because of the deal it offers: the phone is effectively free, available for a refundable deposit of Rs 1500. According to Data released by Counterpoint Research, JioPhone had a 26% share of the segment of the market that comprises of devices typically under Rs 2,000. Samsung followed with 15% trailed by Micromax at number three.

Jio’s competing telecom service provider Airtel has signed a series of deals to launch low-cost smartphones in India. Most recently, it partnered with Google launch Android Oreo-powered smartphones, manufactured by Lava and Micromax. This deal is a part of its “Mera Pehla Smartphone” initiative, which began in October 2017 to build an “open ecosystem” of affordable 4G smartphones. In November last year, Airtel partnered with Karbonn Mobiles to bring such phones powered by Android 7.0 Nougat OS starting from an effective price of Rs 1799. Then in January 2018, the telecom operator also announced a deal with Samsung for its Galaxy J-series phones.

Airtel has an advantage over Jio, as it gives users a smartphone experience. At the same time, Jio’s prices are tough to compete with. JioPhone recently updated its offering, making the popular Facebook App available via its inbuilt app store. Now with a stake in KTI, Jio’s impact on the phone’s software changes may increase.