Sometime back checking news online, I came across this eye catching news item where it talked about a smartphone for in INR 251 (under $4) and it got me excited as Aakash tablet did some years back. I had ordered Aakash (didn’t get one though) then and I was looking to order to Freedom251 as well.
I believe that any “for profit” private entity would never sell its products without making profits. Lets assume that Ringing Bell Pvt Ltd is making profit one or the other way. I will try to figure out the price of INR 251 by looking at their specifications for their phone Freedom251. I will try to make a case of building a Bill of Materials for the phone with these specification in mind and bulk quantities. These are just indicative prices of the parts based on my scrubbing online prices and assuming huge economies of scale. There are other costs like pcb, mechanical, assembling, branding that needs to included. There will also be other NRE and software development costs involved.
The BOM comes to $12.6 which is little over 800 rupees (1USD=INR67)
So as per the pricing at COGS, profit doesn’t look like feasible and they will be selling this product at profit. And in the business of selling smartphones there isn’t much available in terms of business models where money can be made.
So to me it looks more like a Marketing plan to buy cheap devices <3K range and probably hand over to few customers at INR 251 to create hype. I myself tried registering on their website multiple times but it just took my details and page refreshed without accepting my order. I haven’t heard anyone who has booked a phone. Please comment in case someone has been able to book a phone.
Their claim is that they have received 25 Lakh registration and initially it was only advance payment. Later they are started COD as well. The tried to create authenticity by getting Indian government into the loop and using “Make In India” ,”Start-up India” & “Swach Bharat”. They also tried to get some press with news stating that India’s Defence Minister Manohar Parikkar and another BJP senior leader Murli Manohar Joshi who actually turned up for the launch event.
The jury is still out and lets see if these guys will be able to deliver. I will update this post again in after June when the claim to be shipping their devices.
As of now to more it looks like a fallacy but I will still hope that they deliver their promise.
Update (25th December 2017)
Just to complete the article. The Freedom Phone never came into existence. The idea behind did come out in open when Mohit Goel, founder of Ringing Bells was arrested and later released. More than 6 lakh booking for Freedom 251 was done within minutes. I also tried many time but the website never worked for me. All the pre booking amount was returned to customers and Mohit Goel was released by the police after it was found that idea behind selling the phone was inspired by business model that newspapers. A newspaper sells for lets say 5 rupees but cost borne by the company is around 80-90 rupees. It is basically subsidized by company as well as by the revenue generated advertisements. Mohit inspired by this, set a deal with a Taiwanese company that was selling the phone at Rs 1431 which is the cost for Ringing Bells. Mohit was selling it for 251 and for the remaining amount there was another deal set with 28 App Companies whose apps will come preinstalled for which each of them paid Rs 35 each. There was another 200 deficit that company was planning to get through adds and websites. All in all the plan was to make 100 on each mobile sold to the user.
As such it was great marketing campaign which caught imagination of millions in India. Its still a business model that can work if executed properly. Ideally the phone can be given for free as with the case of newspaper and people will agree to receiving calls, adds or any other targeted marketing campaigns. My analysis still holds and Ringing Bells business model could have worked. I believe they shot into limelight too much without worrying about the intricacies of supply chain and customer care.