Questioning the feasibility of Freedom 251, Datawind CEO Suneet Singh Tuli trashed the explanation given by Noida-based startup Ringing Bells that domestic manufacturing have allowed them to offer the world’s cheapest smartphone for just Rs 251 or less than $4.
“Firstly, make in India is actually assemble in India. While local assembling is the first step towards local manufacturing, it is impossible to have such a huge impact on the bill of materials,” Tuli said.
Ringing Bells president Ashok Chadha in an interview with The Times of India said that the company would not only sell the smartphone for Rs 251 but also make a profit of Rs 31 from each unit. Chadha primarily stressed that “economies of scale, domestic manufacturing and online sales without much marketing expenses” is allowing them to deliver the world’s cheapest smartphone.It is questionable as to what impact does online sales and marketing have on the actual cost of components or the total bill of materials.
During the launch, Chadha while justifying the price of Freedom 251 said, “The cost of making one unit of the smartphone is around Rs 2,000. By making in India, this price goes down by Rs 400. Then we will sell online only. So, this pulls down the price by Rs 400 further. We are sure that this smartphone will be in a lot of demand. We are assuming to save around Rs 500 from this economy of scale. At last, we wait for our platform to grow, so, that we can make money from other services.”
In reply to this, Tuli said, “To take advantage of economies of scale, Ringing Bells has to be of the likes of Samsung in the market. The promise of just delivering 25 lakh units online and another 25 lakh units offline is not that big to have such a drastic impact on the making costs. Also, it is absurd to hear that online sales will have an impact on the bill of materials.”
Commenting on the ‘make in India’ advantage, Tuli said, “In reality, make in India costs more than made in China. Local assembly simply provides some duty benefits. However, in no way can it help Ringing Bells reduce the cost by around Rs 400 per unit for a Rs 2,000 smartphone.”
Amidst all apprehension, the Aakash maker summarised the entire hype around Freedom 251 by saying, “Freedom 251 is just a marketing promotion of an existing Chinese product already being sold in Nehru Place (in New Delhi). It is impossible. The price of 1GB RAM and 8GB ROM is more than the price of the device. There is no innovation but do expect surprises soon.”