Reliance Jio - Business model, Sustainability, Strategy

There is a sea of questions around JIO:
How & why is Reliance Industries Limited (RIL) offering 4G data at such cheap rates? How & why is RIL providing unlimited voice calls (local/STD) free to every JIO customer? How & why is RIL offering unlimited 4G data at night? How likely is that Jio will revolutionize the internet market in India?

Lets try to answer all above questions by
Understanding what is Jio & what is RIL's Business Model for it.

Brief History of RIL & JIO:
RIL is an Indian conglomerate; that owns businesses across India in sectors like - energy, petrochemicals, textiles, natural resources, retail, telecommunications; founded in 1966 by Shri Dhirajlal Hirachand "Dhirubhai" Ambani and is currently run/owned by his son Shri Mukesh Dhirubhai Ambani. RIL is the 3rd most profitable company in India, the 2nd largest publicly traded company in India by market capitalization, & the 2nd largest company in India as measured by revenue after the government-controlled Indian Oil Corporation.

In Jun 2010, RIL bought a 96% stake in Infotel Broadband Services Limited (IBSL) for INR4800Cr. Although unlisted, IBSL was the only firm to win broadband spectrum in all 22 zones in India in the 4G auction that took place earlier that year. Later continuing as RIL's telecom subsidiary, Infotel Broadband Services Limited was renamed as Reliance Jio Infocomm Limited  (RJIL) in Jan 2013.

RJIL doing business as Jio, is a LTE mobile network operator in India. It is a wholly owned subsidiary of Reliance Industries headquartered in Mumbai, that provides wireless 4G LTE service network (without 2G/3G based services) and is the only 'VoLTE-only' (Voice over LTE) operator in the country which lacks legacy network support of 2G and 3G. The services were first beta-launched to Jio's partners and employees in Dec 2015 and later services were commercially launched in Sep 2016.

Shri Mukesh Dhirubhai Ambani launching JIO

Facts about JIO:
💚 Largest fiber optic network in India - RIL laid 250k KMs of high quality fiber optic cable and installed over 90k eco-friendly 4G towers. Importantly, Jio is using cables of 288 fibers or 96 fibers in most places while other players have cables with only 12-24 fibers. More fibers means more bandwidth and more speed. This is an unprecedented feat in Indian mobile network industry. Most other companies do not lay such large amount of cables, instead they depend on agreement with various other companies who own fiber networks. Apart from this, Jio also have access to the cables laid by Reliance communications.

Technology angle:

Mobile towers are like large WiFis. Just like the WiFi in your home is connected by wires to your internet service providers, mobile towers needs to be connected to fiber optic cables under the towers and these wires connect to large ISPs. So, when you use 3G/4G, you are only communicating wirelessly inbetween your smartphone and the tower. Once the data reaches the tower, the entire data is sent through these fiber optic cables. This is why fast fiber network cables are really important for providing fast 4G. 

Competition angle:

Other service providers already had fiber network laid for 2G/3G - they just replaced the mobile tower with new 4G equipment while relying on old fiber networks - They are worried about upgrading to better infrastructure because last time when they upgraded to 3G, they lost thousands of crores in Investment as 3G never generated as much income as they hoped for.

RIL angle:
Jio knows that 5G will come soon, so they are making their entire fiber optic network in such a way that it can be seamlessly upgraded to 5G tomorrow.

💚 Only company to have 4G spectrum in All zones - Because IBSL/JIO was the only firm to win broadband spectrum in all 22 zones in India in the 4G auction, it has the capability of providing 4G services in all 22 circles

Competition angle:

Bharti Airtel can provide 4G services in 15 circles
Idea can provide 4G services in 10 circles
Vodafone can provide 4G services in only 8 circles

RIL angle:
JIO can provide 4G services over India.

💚 Largest 4G network in India - Jio's coverage is bigger than 2G coverage of most other players! Jio has 4G network coverage at over 1.02Lac villages & 18k towns. JIO plans to cover all of India by 2018.

💚 JIO only has 4G - This has many benefits to both RIL and users. RIL can fully focus on one technology instead of maintaining 2G+3G+4G at all places. It is cheaper as they have only one service. One annoying-problem people face with 3G is that it often switches automatically to 2G. Since Jio only have 4G, one will either get high speed internet or no internet. They also have agreements with BSNL and Reliance communications for using their networks to provide 2G/3G at places which they don't give 4G.

💚 Huge investment - RIL invested $22B (INR150000Cr) into this project - This is almost as much as the major incumbent telecom firms, like Bharti Airtel Ltd, Idea Cellular Ltd and Vodafone India Ltd, have spent over the past more than 20yrs of being in operations.

Competition angle:
This forces other players to invest more into their own infrastructure - Airtel has already announced that they will invest 60,000crore in modernizing their network.

Technology angle:
RIL owns two international submarine cable landing stations - Bay of Bengal Gateway (JIO is part of this 8000KM long submarine fiber optic cable which connects Malaysia and Singapore to Chennai) & Asia Africa Europe One submarine cable system (JIO is part of a 20000KM long cable which connects Europe to Mumbai. This cable has 32-40 terrabit per second capacity against the Airtel's cable system of 3.84 tbps)

💚 Ecofriendly towers - RIL brought the concept of eco-friendly and camouflaged cellular towers to India. JIO's towers look like a tree are not actually a tree. It is a cellular tower which is made to blend with the nature and look like a tree. This is done so that the usual bulky metallic telecom towers don't damage the place's natural view.

💚 Only company in India to use VoLTE (calls are also sent as data) technology - 4G is exclusively designed for high speed data transfer and it cannot handle normal mobile calls. To solve this issue, other players switch to 3G/2G whenever a call is made. Since Jio doesn't have 2G/3G, they send calls as data through 4G itself. This is similar to skype/whatsapp calls but probably in much better quality.

💚 Disruptive Pricing - JIO started with giving FREE calls+data for almost an year. And then moved to giving 30GB data with FREE Calls for INR300 per month.

💚 1GB/sec wired Broadband - Jio is not just about 4G - They are also planning to offer ultra high speed fiber optic connections to homes too with peak connection speeds up to as high as 1 GBps.

Business model of JIO:

Tariff Plans of JIO

After looking ta the attached image, if we exclude the unlimited night data (and the wifi data which many of us may not have access to), then the price per GB of these plans is in range of INR60 to INR125 per 1GB. If you are someone who uses 5GB of data every month, and you were currently spending INR1000 per month with the current providers, you will be happy that you can get same amount of data for INR500. But, you are likely to spend the same amount of money over the time and consume 10GB of data for INR1000, instead. This is because 4G speeds are awesome and now there are many more ways to spend the data. And, since you have the budget for it, you are likely to spend more. So, even though you are getting much more value than the current operator, JIO will still make the same/better revenue, as compared to the existing competitors.

RIL angle:

If you do the math, you will be able to realize that even if 25%-30% of people in India will use 2GB of JIO internet data per month, then RIL will recover the entire initial investment $22B in just 3yrs.

Summary:
RIL/JIO has left no stone unturned for this mega project. According to Shri Mukesh Dhirubhai Ambani, currently India stands 150th in mobile Internet rankings out of 230 countries. He believes that India's rank will go up from 150 to among the top 10 of mobile Internet rankings in the world due to this project. We need huge companies like Reliance to invest in such mega projects for our entire country to progress.

Jio Route (Jio's full fiber network) on Google Maps:
google.com/maps/d/embed?mid=1dAcxwsLqgNaMiqkf4r6pXMQN_8o

Sources:

https://en.wikipedia.org/wiki/Telecommunications_statistics_in_India

https://en.wikipedia.org/wiki/Jio

http://www.trai.gov.in/sites/default/files/Press_Release_11_17_Feb_2017_Eng_0.pdf

telecom.economictimes.indiatimes.com/news/3g-4g/reliance-jios-voice-and-broadband-network-is-upgradable-to-5g-mukesh-ambani/47644803

http://www.livemint.com/Industry/tyb7WgA82kVA9vGM5DtHoJ/Reliance-Jio-to-raise-Rs15000-crore-via-rights-issue.html

http://www.airtel.in/leap

telecom.economictimes.indiatimes.com/news/undersea-8000-km-long-cable-project-by-reliance-jio-vodafone-others-reaches-chennai/50686502

http://www.dnaindia.com/money/report-rjio-logs-into-biggest-broadband-cable-system-2157904

http://telecomtalk.info/reliance-jio-takes-the-green-towers/143650/

https://www.youtube.com/watch?v=vgZoVtu8aag

http://trak.in/tags/business/2016/03/30/reliance-jio-data-price-voice-calling-sim-card/

http://telecomtalk.info/jio-fiber-to-the-home-deliver-speeds-up-to-1gbps/147416/

indianexpress.com/article/technology/tech-news-technology/with-rjio-4g-indias-mobile-internet-ranking-to-reach-top-10-globally-mukesh-ambani/
https://www.quora.com/How-likely-is-that-Reliance-Jio-4G-will-revolutionise-the-internet-market-in-India/answer/Kshitij-Salgunan
https://www.quora.com/What-is-the-business-model-of-Reliance-Jio/answer/Kshitij-Salgunan
https://www.google.com/maps/d/embed?mid=1dAcxwsLqgNaMiqkf4r6pXMQN_8o&hl=en_US

what on earth is 3D Printing

What is 3D Printing?

3D printing, also known as Additive Manufacturing, refers to processes used to synthesize a 3D (three-dimensional) object in which successive layers of material are formed under computer control to create an object. Objects can be of almost any shape or geometry and are produced using digital model data from a 3D model or another electronic data source such as an Additive Manufacturing File (AMF) file.

How does 3D Printing work?

It works just like any other inkjet printer - with the only difference that instead of Ink, it deposits the desired material in successive layers - thus creating a desired physical object.

What can be 3D printed?
Almost everything - Houses, Cars, Food, Dresses, Toys, Body parts/organs, Jewelry

What's the History of 3D printing?

In 1984, Chuck Hull of 3D Systems Corporation developed the 1st Stereolithography Apparatus. Stereolithography - also called Optical fabrication or Photo solidification or Resin printing - is a form of 3D printing technology used for creating models, prototypes, patterns, and production parts in a layer by layer fashion using Photopolymerization (a process by which light causes chains of molecules to link together, forming polymers). In 1986 Charles Hull was awarded a Patent for his SLA. In 1992, 1st SLA machine was developed by 3D Systems Corporation.

What is the history of Organ printing?
Organ printing is also called Bio printing, or Body part printing, or Computer-aided tissue engineering. It happened for the 1st time in 1999 when a 3D-printed synthetic bladder was produced. In 2002 a fully-functional 3D-printed synthetic kidney was produced. In 2008, a 3D-printed synthetic leg was produced and a person walked using it. In 2009, a 3D-printed synthetic blood vessel was produced by Organovo. In 2012, a 3D-printed synthetic jaw was produced.

Resent advances:
In 2008, Shapeways, launched a Print-on-Demand service.
In 2014, Amazon lunched its 3D printing marketplace.
In 2015, Google acquired Carbon3D

What can we expect 3D printing doing by 2030?
1. The price of the cheapest 3D printer has already come down from $18k to $400 within last 10 years.It will become far-more cheaper & it will thus become affordable - Each household will have a 3D-printer.
2. Houses will be built-on-demand - China already 3D-printed 10 houses in 1 Day.
3. 10%-20% of everything will be 3D-printed - Already many shoe-manufacturers have started making 3D-printed shoes. Spare airplane parts are already 3D printed in some airports. Some space stations have a 3D printer that eliminates the need for the large amount of spare parts they used to have in the past.
4. Smartphones will have 3D scanning feature - you will be able to 3D-scan your feet, and print your perfect shoe at home.
5. 3D printed jaws & skulls have been implanted successfully till now. 3D-printed Livers will be implanted soon.

Important videos on this topic:

Sources:

http://www.engineering.com/Portals/0/BlogFiles/3D%20Printing/0913/hist3d.jpg

http://3dmasterminds.com/wp-content/uploads/2015/12/3d_Printing.jpg

https://en.wikipedia.org/wiki/3D_printing
https://s-media-cache-ak0.pinimg.com/originals/72/27/b9/7227b940febac728b7432c9cfd59fde1.jpg
http://explainingthefuture.com/3dprinting.html

Grapes vs Raisins price differences - in India vs US - Pricing strategy - Micro-Economics at play

In US, Grapes are usually way more expensive than the Raisins.

While in India/China, Raisins are usually way more expensive than the Raisins.

Why Grapes are costlier than Raisins in US?

1.
Fresh foods have the highest markups; anything up to 75%; in a grocery store, because there is a high level of spoilage in fresh fruits/groceries - And, the grocery-shop-owner wants to keep only the best+fresh fruits to keep their overall image.

2.
Grapes need to be fat, juicy, appealing. While the grapes that would be used for raisins need not look fat, juicy, uniform, appealing, etc. To keep grapes fresh, the grocery-shop-owner has to do cautious-picking & extra-care-storage - Also, farmers go to great extent in growing juicier grapes with the use of hormones - All this adds to the cost. While when it comes to raisins, nothing such is needed.

3.
Grape is a seasonal crop and can be stored only for the season and requires cold storage facilities for the same - This leads to a highly uneven supply and high storage costs to avoid dumping in the market. While the raisins can be stored all year around with comparatively lesser expenses.

4.
Among all the fruits, grapes are often consumed by people with less price sensitivity - mostly upper middle class & rich class. This allows for having a high markup.

Why Raisins are costlier than Grapes in India, China, & other Developing-countries?

1.
In India the grocers don't care much about keeping the grade-A-fruit.

2.
The purchasers of fresh fruits are highly price sensitive (mostly poor class & middle class), while the purchasers of raisins are not price sensitive (mostly upper classes).

What is Markup in Pricing?

If a product's total Unit Cost =
$100

Sales price with a 25% markup =
$125

Gross Profit Margin = Sales Price - Unit Cost =
$125 - $100 = $25

%Markup = Gross Profit Margin / Unit Cost =
($25 / $100) * 100 = 25%

Sales Price = (Unit Cost * %Markup) + Cost =
($100 * 25%) + $100 = $125

Source:

aol.com/article/2011/02/18/biggest-grocery-store-markups/19838710

npr.org/sections/thesalt/2013/03/06/173617381/we-like-em-big-and-juicy-how-our-table-grapes-got-so-fat

sandiegoreader.com/news/2012/aug/22/straight-cost-grapes-raisins
ers.usda.gov/media/320335/aer825_1_.pdf

Sachet pricing - Pricing & Marketing strategy - Micro-Economics at play

In India, why is a Shampoo Sachet is usually much Cheaper than a Shampoo Bottle?

We will try to answer:

1.
Sachet is more cost effective both in distribution and packaging.
Packaging a sachet just requires cheap plastic and shampoo-company doesn't need to worry about attractive bottles or tamper-proof lids, etc.

2.
95% of Indian shampoo sales are through Sachets - which in turn means is that it is much easier to sell 50 sachets than 1 bottle - And quick turnover in turn means lower costs.

3.
Sachets are primarily sold through smaller retailers who run with lower margins and overheads.
Bottles are often sold through supermarkets with higher overheads.

4.
Sachets are often sold to the people who are all quite price sensitive - poor class, middle class, cost conscious upper class.
While the bottles are sold to all those who are not price sensitive and who get hoodwinked by attractive packaging.

Sources:

researchgate.net/publication/233676293_Buying_less_more_often_An_evaluation_of_sachet_marketing_strategy_in_an_emerging_market

duplication.net.au/ANZMAC09/papers/ANZMAC2009-403.pdf

rappler.com/business/3514-products-in-bulk-packages-cost-more-than-in-sachets

nextbillion.net/small-is-beautiful-small-is-cheap-but-do-the-poor-care/

Odd pricing - Pricing & Marketing strategy - Micro-Economics at play

Odd pricing (also called - Psychological pricing, Price Ending, Charm Pricing) is a pricing & marketing strategy based on the theory that certain prices have a psychological impact on the buying behavior of the customers.

Example:

You would have seen that the sale-prices are often expressed as odd-number prices i.e. a little less than a round number, e.g. $19.99 or £2.99.

Reasoning:

1.
There's evidence that consumers tend to perceive “odd-number prices” as being significantly lower than they actually are, tending to round to the next lowest monetary unit.
Thus, prices such as $1.99 are associated with spending $1 rather than $2. 

2. 
Fractional prices suggest to consumers that goods are marked at the lowest possible price.
When prices end in an odd way, say $39, customers tend to believe that the product is priced at a discount (maybe at $1 or $11).
On the other hand, rounded numbers convey an impression that the retailer is padding the price with a big fat margin.

Research:

According to a 1997 study published in the Marketing Bulletin,

approximately 60% of prices in advertising material ended in the digit 9,

30% ended in the digit 5,

7% ended in the digit 0

and the remaining seven digits combined accounted for only slightly over 3% of prices evaluated.

Source:

https://en.wikipedia.org/wiki/Psychological_pricing

Decoy effect - Pricing & Marketing strategy - Micro-Economics at play

Decoy effect (also called Asymmetric dominance effect) is a marketing & pricing strategy whereby consumers will tend to have a specific Change in Preference between 2 Options when also presented with a 3rd option that is asymmetrically dominated.

Example:

Assume that there are 2 media-players; of a given company ABC; present in the market: X & Y, with prices $40 & $30 respectively and storage 30GB & 20GB respectively. In this case, some consumers will prefer A for its greater storage capacity, while others will prefer B for its lower price.

Now assume a new player Z in launched; by ABC; in the market.

Z's price is $50 & storage is 25GB.

Because X is better than Z in both price & storage, while Y is only better than Z in pricing, more consumers will prefer X now than did before.

In this case, Z is therefore a DECOY whose sole purpose is to increase sales of X.

To understand this concept better, assume that Z's price is $35 & storage of 15GB.

Now, because Y is better than Z in both price & storage, while X is only better than Z in storage, more consumers will prefer Y now than did before.

In this case, Z is therefore a DECOY whose sole purpose is to increase sales of Y.

Real-life case-study:

Decoy-effect explains why Apple often sells each gadget in a pricing series, such as the new iPod Touch's $229, $299, and $399 price points for different storage capacities.

You may gladly spend $229 to get a hot media player, thinking it's a deal compared with the highest-priced version and not blink that you could instead buy an iPhone 4 at the lower price of $199 with more features.

The $399 "decoy" has clouded your judgment.

Apple wins the best of both worlds - stoking demand for products that look like bargains and for all the decoys it sells at much higher prices.

Yes, some people will spend $399 for a music player with slightly better technology - and Apple makes even fatter margins.

Source:

theatlantic.com/technology/archive/2010/10/apples-brilliant-decoy-pricing-game/64104/
https://en.wikipedia.org/wiki/Decoy_effect

Buy-back schemes - Pricing & Marketing strategy - Micro-Economics at play

The companies who buy 2nd-hand (used) electronics (smartphones / mobiles / televisions / etc.) sell them off at loss to some 3rd party vendor - usually at a LOSS.

Question is that why does a company bear that LOSS?

Reasoning:

LOSS = Customer Acquisition COST

Usually high end electronics (smartphones & televisions) have high profit margins - at times up-to 50% - which means that if the sale-price of a smartphone is $600, the company is making $300 profit in it.

So, to acquire a new customer base, they can give away a share of their profit margin to the customer.

A Buy-back Scheme; from this perspective; is no different from any other promotion / offer run by a company.

sample "Exchange offer" ad 

Nano - Car - the epic Marketing & Product Failure of TATA

TATA's Nano Car, as a product failed at multiple frontiers, marketing being the biggest one.

I totally fail to understand what TG did TATA had in mind for their NANO car. Nano was marketed as ‘CHEAP’ / ‘Affordable’ car - So, I assume it was for the targeted towards the lower-middle class or towards the college-going-students - BUT if that is actually the case, I would say that TATAs did not actually understand their Nano’s TG at-all. Reasons, why I say that are following:

Pricing of the NANO was way-too-expensive for the lower middle class.

Wouldn’t a college going student buy a fancy motorcycle for much less than 1Lac, instead of buying a 1.5Lac Nano?

The Upper middle class & the middle class DO NOT SEE CARS as a UTILITY - not that they do not plan to use it - but they buy cars so that thy can SHOW IT OFF. Obviously, no one would SHOW-OFF anything that’s tagged as CHEAP.

Nano was built for short-distance travels - While in India, the MIDDLE-class mostly uses cars for long-distance travels - like going for holiday to a nearby city or going to their relatives in the other end of the town. People prefer using rickshaw or auto or buses for shorter-distance-travels.

Nano was marketed as ‘CHEAP’ car - but give me a break - How is 1.5Lacs cheap - Anyone can get a good-going used car for that price.

Other issues that Nano had was that - (1) it can not accommodate a normal-sized MIDDLE class family (2) it had low suspension - which is BAD for elderly people.

Pet Rock - Marketing & Business Case study

CAN YOU SELL a ROCK to ANYONE on the Planet Earth?

YOU WOULD OUT-RIGHTLY SAY NO!!!

Guys, I Present to you: PET ROCK

What began as a joke hatched in a bar turned into one of the most bizarrely successful marketing schemes of all time. 

And the Pet Rock, an egg-shaped stone sold for $3.95 a pop, turned its creator, Gary Dahl, into a millionaire almost overnight.

Chatting about the myriad responsibilities of owning pets over drinks in the mid-‘70s, Dahl joked to friends that he had the perfect pet: a rock - before suddenly realizing he’d stumbled upon a viable product.

The rocks were purchased for a penny a piece from a beach in Mexico, but consumers were captivated by the clever packaging. Cardboard carrying cases were punctured with air holes and each stone was ensconced in a kind of straw-like nest. Each came with its own manual, which detailed care instructions. “You might say we’ve packaged a sense of humor,” Dahl told People in 1975.

Source

https://www.entrepreneur.com/article/244602