Reliance Jio had a huge week. Actually, it has been having a huge year while the world has been in the middle of a pandemic. It has raised more than $20 billion in four months, an unprecedented feat in the normal world, arguably even more game-changing considering the global pandemic. While Jio now counts several top-tier US-based private equity and VC funds, Facebook, and middle eastern wealth funds as its investors, Jio’s latest three partnerships which include Google, Qualcomm and Intel points toward something broader than just collaboration for a new budget Android play that Mukesh Ambani and Sundar Pichai announced earlier this week. This points towards a huge play towards education and hardware which goes well beyond budget Android smartphones. Before I connect the dots, let’s first take a look at what has been announced and officially said.
The official line
- Google’s investment of $4.5 billion is for a 7.73% stake in Jio Platforms. This is the second-highest minority stake after Facebook’s $5.7 billion for 9.99%. The official Google blog authored by its India boss Sanjay Gupta and VP of product management Sameer Samat states, “Google and Jio Platforms have entered into a commercial agreement to jointly develop an entry-level affordable smartphone with optimizations to the Android operating system and the Play Store.”
- Qualcomm’s investment of $97 million for a 0.15% seems like peanuts compared to what Google is putting in, however, this is bigger than the monetary amount would suggest. “With unmatched speeds and emerging use cases, 5G is expected to transform every industry in the coming years. Jio Platforms has led the digital revolution in India through its extensive digital and technological capabilities. As an enabler and investor with a longstanding presence in India, we look forward to playing a role in Jio’s vision to further revolutionize India’s digital economy,” said Steven Mollenkopf, Qualcomm’s CEO.
- Intel has made a bigger investment in Jio than Qualcomm. Its 253.4 million get it a 0.39% stake in Jio platforms. Its statement is more ambiguous than Google’s or Qualcomm’s. “Jio Platforms’ focus on applying its impressive engineering capabilities to bring the power of low-cost digital services to India aligns with Intel’s purpose of delivering breakthrough technology that enriches lives,” said Wendell Brooks, Intel Capital president.
- There is one more player people haven’t figured out as pointed out by Greyhound Research, founder and chief analyst Sanchit Vir Gogia — AMD. Mubadala, the sovereign fund of the Abu Dhabi government has a 4.9% stake in AMD. Mubadala’s $1.2 billion stake could give Jio some indirect access to AMD for potential collaborations. “We have seen how Jio has already transformed communications and connectivity in India, and as an investor and partner, we are committed to supporting India’s digital growth journey. With Jio’s network of investors and partners, we believe that the platform company will further the development of the digital economy,” said Khaldoon Al Mubarak, Managing Director and Group CEO, Mubadala Investment Company.
- The one thing that went under the radar of most but came into the spotlight earlier this week at Reliance’s AGM was Isha Ambani’s presentation on education, especially regarding Embibe. Reliance took a 72.69% controlling stake in the Bengaluru based AI-based Edu-tech startup Embibe in 2018. Earlier this year in April, Jio further boosted the start-up with a $666.2 million investment in the start-up following up a $119.8 million investment in the start-up in February. Isha Ambani announced an audacious plan of connecting more than 22,000 schools and over a million teachers in India.
- Jio’s most recent product Jio Meet is also part of this huge edu-tech gambit. Isha Ambani announced the fusion of Embibe with Jio Meet which would connect all teachers and students alike over the internet. At the AGM, Reliance announced that Jio Meet had already been downloaded by 5 million users which is an impressive number.
KaiOS could be merging with Android Go fuelled by Jio branded hardware powered by Qualcomm silicon
Going deep into Google’s official statement one can see that this is about getting about 500 million Indians online. India is now the world’s largest open Internet market. It still has 500 million users who are offline and 350 million users on feature phones like the Reliance JioPhone. Now is the time to convert all of these users to smarter connectivity and computing — which means Android. Both Google and Jio backed an OS called KaiOS in the past which fuelled the success of the original phone. KaiOS was the smart feature phone operating system that powered the JioPhone. Google invested 22 million in the platform in 2018 while also developing many of its services for the platform giving it a controlling stake in the platform. Jio also invested $7 million for a 16% stake in the platform. Already, Google and Jio basically control KaiOS. But KaiOS is also something that’s throttled Android Go, Google’s slimmed-down version for Android for phones that cost less than $100.
This points to the most logical thing Google and Jio could do. Merge KaiOS and Android Go. Bring the full power of Android apps to KaiOS and give it some Android branding. Already, KaiOS supports watered-down versions of Google and Facebook apps. On a technical level, there is also a lot of commonality between KaiOS and Android on a kernel-level which should make the merger easy.
Already, the platform works on 4G, so the next logical step would be 5G something which Jio is bringing to India with its Radisys based technology. If 5G has to get democratised, it needs to have an encore of what Jio did for 4G with the original JioPhone. That would also need a more sophisticated operating system than KaiOS. It will need something with the power of Android, however, a more efficient version of Android that’s cheaper to run.
This is where Qualcomm comes in. The world’s largest fabless silicon maker which powers the majority of Android smartphones on the planet. It is also the key driver for 5G as it has made standards-essential IP for the deployment of 5G. Even Apple couldn’t circumvent it as the 2020 iPhone 12 is widely expected to use Qualcomm’s 5G modems. Jio and Google will need Qualcomm on board if they have something wild cooking.
This will probably happen in stages. The first fruit would be a low-cost Android phone which is similar to Android Go software wise but coupled with a suite of Google, Jio and Facebook apps preloaded based on a Qualcomm SoC targeting the sub Rs 5,000 market. Jio will likely subsidise the hell out of this phone like the way it did so with the original JioPhone. Eventually, an encore would be repeated with an affordable 5G phone.
Already Qualcomm has a chip for affordable 5G phones called the Snapdragon 690. It was announced only a month ago which means realistically phones based on the chip will only see the light of day in 2021. Jio could be working on a phone-based on that chip or its successor. Qualcomm’s Snapdragon 600 series of processors usually show up in phones that cost between Rs 10,000- Rs 20,000. Qualcomm is likely also working on a version of the chip that’s cheaper as a part of its 400 series which would push down the cost of a 5G compatible phone to below Rs 10,000.
Google and Qualcomm are highly incentivized on India going 5G fast. This will unlock more opportunities for both companies. Jio is the only logical partner for them considering it is far ahead of Airtel and Vodafone with the development of 5G with the Radisys acquisition and financially being backed by the richest company in India. Airtel and Vodafone also have financial issues and regulatory issues in India aside from their infrastructure having elements of Chinese equipment from Huawei and ZTE which are now out of play in India.
Jio has also announced a wearable called Jio Glass which is likely to be powered by an ARM-chip, likely to be from Qualcomm. This is another area where Jio’s augmented reality and educational ambitions tie in closely with their hardware gambits.
Edu-tech is likely to be a huge play with Chromebooks powered by Intel chips
Reliance has made its ambitions in the education space widely known and they do go beyond Jio Glass. It wants to compete with Byjus. Its acquisition of Embibe was wildly brandished at the AGM earlier this week. Isha Ambani made a bold presentation of how Jio Meet would be integrated with Embibe bringing high-quality education to the masses over Reliance’s networks.
But for education, you just don’t need a fast and reliable network, an educational platform coupled with the delivery mechanism just as Jio Meet, but also purpose-built hardware. People can’t just learn on a tiny phone screen. I mean it can be done, but it is not optimum.
People still need proper computers – laptops and desktops. If anything, the coronavirus pandemic has taught the smartphone ecosystem then it is that the PC is far from being dead – it is still the device to have to get work done.
And in the educational sector, Chrome OS and Google’s ChromeBook’s reign supreme. Chromebooks have proven to be vastly more secure and technologically robust when married with a powerful broadband connection. Fast connectivity is what Jio is all about. Chromebooks mostly are powered by Intel’s silicon. That’s where the Intel investment comes in, alongside, Google’s audacious bet on Jio.
Jio Meet is also a web-based solution which can easily be adapted to work on ChromeOS either natively or by way of Android app support which is already there on the platform.
The biggest advantage of ChromeOS has cost. Chromebooks are cost-effective. That’s why they have become the dominant educational computing platform in the US, over the last decade. Over 40 million Chromebooks are used in the US by students as of January 2020. In the US and Canada, Chromebooks dominate the educational sector with over 60% market share.
Google has been trying to make ChromeOS popular in India for years. As of June 2020, Statcounter states Chrome OS only commands 0.12% of India’s desktop operating system market. Remember, ChromeOS was something that was developed directly by Sundar Pichai’s team a decade ago before he became a rising star at Google. His work with the Chrome Browser and ChromeOS fueled his rapid ascent at Google where now he also is the CEO of its holding company Alphabet. ChromeOS as a platform is arguably even more important to Google than Android.
The rapid adoption of ChromeOS means faster adoption of Google’s Cloud services that are tuned for the educational and business segment with its G-Suite of Apps. This is a space that’s dominated by Microsoft in India.
Jio could help Google take on Microsoft in this space with affordable Chromebook hardware bundled with its broadband connection and Embibe. They could sell bundles en-masse to schools, colleges and collaborate with government institutions like the CBSE with whom they are already working.
The other advantage of ChromeOS over Windows is that it works well even on ARM-based silicon — basically the type of chips that are used on mobile phones. This is where the Qualcomm investment comes in too.
As the web becomes more and more accessible, there could be a paradigm shift away from native applications to progressive web-based applications something Chrome as a platform has championed. This will happen more effectively with 5G. In that world, software that’s running off the data center would make more sense than on-prem solutions. It would certainly be the most cost-effective way of working. Again ChromeOS ties well into that world view.
At its core, Jio orchestrated a bold partnership with the world’s two largest manufacturers of silicon for both general purpose computing and mobile computing. It can potentially have hooks into the server market as well with close ties with both Intel and Qualcomm. It also has the world’s biggest computing platform Google on its side with Android and at the same time, it is within touching distance of AMD via its relationship with Mubadala and a previous partnership with Microsoft with whom it has partnered for Azure in the past.