LeTV, the Chinese content company that entered the smartphone market last year, could disappoint Indian fans on pricing when it unveils its first two models here – Le 1s and Max.
The reason? The devices are likely to be priced higher in India compared to what they sell for in the home market, where it uses its ancillary revenue to subsidize hardware costs.
According to our sources, the company will have to price the Le 1s between Rs 17,000 and 18,000 without subsidies.
UPDATE: The company said it will price the phone at Rs 10,999 in India, despite it costing Rs 16,000 to manufacture it.
In China, the company sells the phone at around Rs 11,500, which is below the total cost of materials used inside the device.
The total bill of materials alone for the 1s is Rs 13,500. Add shipping charges, service costs, retailer margin and custom and sales taxes, the real cost of the device in India works out to around Rs 17,000. That is much higher than what the fans have been expecting.
“It remains to be seen what their strategy is going to be… If they sell it without subsidies, the final price has to be above Rs 17,000,” said an industry source tracking Chinese smartphone makers’ strategies.
You can watch the LIVE broadcast of the launch of the two phones by clicking on the ‘play’ button below at 2 pm on Wednesday.
The phone is currently available from international e-commerce websites at $180 (Rs 11,800) including shipping to India. Together with custom duty and taxes, that works out to a final cost of around Rs 14,500 without local warranty support.
Most of those awaiting the launch of the two phones — including Le Max (India price likely Rs 29,999) are hoping that LeTV will follow the example of Xiaomi, which priced its first model in the country below cost. As a result, the expectation is for LeTV to announce a price of around Rs 14,000 for the phone on Wednesday.
LeTV has an integrated business model in China that includes content-tieups, videos, apps and other ancillary revenue streams that helps it subsidize the cost of the hardware.
That raises the possibility that the company could try something similar in India, and keep the hardware price low.
Though the device would not be a bad deal at Rs 17,000 or even at Rs 18,000, the problem is one of already builtup expectations as well as upcoming competition.
Xiaomi will launch its Redmi Note 3 (32 GB)– which has superior a camera, processor, battery and service backup — for around Rs 17,000 in about 3-4 weeks from now.
Both Le 1s and Redmi Note 3 are 5.5 inch full-HD model with 32 GB of storage and 3 GB of RAM.
However, the Xiaomi model is built on the more powerful Snapdragon 650 platform, while the 1s is built on the Helio X10 platform.
The Helio X10 is as powerful as the Snapdragon 650 on an overall basis, but for single-threaded tasks, the Qualcomm chipset blows the X10 out of the water due to its use of Cortex A72 processor. The X10 is based on the weak A53 core technology.
The A53 is the ARM core with the least amount of power, followed by the mid-range A57 and the top-end A72. However, due to overheating problems (remember Snapdragon 810?), MediaTek opted for the Cortex A53 core for its flagship processor the Helio X10.
MediaTek currently has only one smartphone chipset with Cortex A72 — the Helio X20 — which is yet to be featured in any model that has been launched in the market.
In addition to having a more powerful processor, the Redmi Note 3 also has superior imaging capabilities compared to the LeTV model.
The Redmi Note 3 comes with a 16 MP camera with f/2.0 aperture lens and phase-detection auto-focus technology which helps the camera focus in just 0.1 second. The 1s makes do with a 13 MP camera.
Another issue is service center back up. Xiaomi has a relatively robust service network in India, while LeTV is a new entrant to the market.
That said, there is no certainty about when the Redmi Note will be launched here, since the company has not given any fixed timeline.
Another rival for the new phone would be the Lenovo K4 Note, which is as good as the 1s in nearly all ways except for the processor and built-in memory. While the model being launched on Wednesday has 32 GB of storage, the Lenovo handset has only 16 GB.
However, the K4 Note — priced Rs 11,999 in India — comes with an external MicroSD card slot, while neither of the other two models — 1s and Redmi Note 3 — support external memory cards.
However, 32 GB will be more or less enough for 90% of the users, though there will be some who keep a large number of songs or videos on their phone and would really appreciate support for external memory cards.
The second device being unveiled on Wednesday is the humongous Le Max, which comes with a 6.33 inch Quad-HD display and either 64 GB or 128 GB of memory.
The Le Max, which also has a 3.4 Ah battery, a 21MP rear camera and a 4-UltraPixel front shooter, is expected to be priced around Rs 30,000 for the 64 GB version and around Rs 36,000 for the 128 GB version.