Freedom 251, The $4 Smartphone is on Course to Reach Consumers
Remember the Freedom 251? No, this isn’t related to politics or revolution, not in any confirmed way at least. Freedom 251 is the name of the $4 Android smartphone, that was being launched by Indian company Ringing Bells Pvt. Ltd.
Poor choice of brand name aside, the Freedom 251 made the news back in February when the smartphone was announced, being promised to the masses for a measly $4. For INR 251 ($3.7 at current exchange rates), you get a 4″ qHD display with a resolution of 960 x 540, with the phone being powered by a MediaTek MT 6582 quad-core processor. There’s also 1GB of RAM, 8GB of internal storage with expandability, a 3.2MP rear camera, a VGA front camera, dual-SIM 3G support, a 1,450 mAh battery and Android 5.1 Lollipop on board. Despite the mediocrity of its specs, the phone packs in unbelievable value for a price that most of us reading would not hesitate to plop down for a burner phone.
We wrote extensively on why the $4 Android smartphone should not exist. And to seemingly prove us wrong, the $4 is actually being made a reality, as it is being promised to make its way to consumers. The initial date for delivery of the smartphone is promised to be 30th June, and the first look of the actual smartphone has been revealed, thanks to a (slightly cringey) hands-on by BBC:
“In the hand, it feels somewhat like Apple’s iPhone 5. As I handle the handset, it seems to work like a basic smartphone. But it is hard to really test its capabilities, as it has very few applications, covering only basic tasks, such as calculator, music player, web browser and email. At the demo, the company told me the final model would be made available for scrutiny only after 30 June. Later, on Tuesday afternoon, it said that date had been delayed until 7 July.”
(Yes, this BBC reporter claims this $3.70 phone feels like an iPhone 5, somehow)
So what has changed with the Freedom 251 since our last coverage?
For starters, question marks still exist on the legitimacy of the company. Ringing Bells continues to be a mysterious entity, but now with a few government inquiries to its name. The company has come under the scanner of Income Tax authorities and the Department of Electronics and IT, as people are still scratching their heads on how the phone is possible at the price it is being promised.
To add some more twist to the already-complicated story, Ringing Bells actually went ahead and returned the payments received from 30,000 customers, citing the negative speculations around its claims.
“There was a lot of negativity around us so we have decided to take money from customers only after delivering phones to them. We are refunding money to those who have paid for booking the phones and giving them an option of cash on delivery”
The phone received 70 Million registrations in the three days it was on sale, with the payment gateway crashing towards the end of it. To put the number into perspective, sales of the Samsung Galaxy S6 were estimated to reach 45 Million in all of 2015. Even by the initial numbers and taking into account that these were just registrations, it was clear that Ringing Bells was in no position to actually completely sate the (apparent) heavy demand for its product.
Now with D-Day coming close, Ringing Bells has claimed that it has nearly 200,000 units of the Freedom 251 produced and ready to be delivered (a few million short of the 70,000,000 registrations). This batch is the first phase of deliveries, and registrations will open again once this phase is completed. Obviously, only a small part of the registrations will be honored, so the company has decided to use a lottery system, allocating 10,000 units to every state of India (for our global readers, India has 29 states and 7 union territories).
“We have got over 2.8 crore registrations from UP [state] and close to 2 crore from Bihar [state]. We will give away 10,000 units in every state. We decided to hold a lucky draw because many people had registered for multiple phones. We want to bring it down to one phone per person. The lucky draw winners will most likely be announced within two days.”
What happens if we assume Ringing Bells successfully sells all 200,000 of its smartphones? Ringing Bells claims that the phone costs INR 1,180 ($17.5) to manufacture, thus bringing in a gross loss of INR 929 ($13.7) per smartphone. That is a total of $2.74 Million in losses from the sale of the first batch alone (not accounting for the delivery charges paid by the customers, as well as other operating costs). How can a no-name company take such a massive loss, and better, how does it even make these phones when it does not have factories to build said phone?
Mr Goel says his company is importing “knocked-down parts” from Taiwan and assembling them in Haridwar in northern India. But once it makes enough money, he adds, the company wants to manufacture all the parts in India. The phone costs about 1,180 rupees to make, and Ringing Bells claims to subsidise it via tie-ups with some of the apps that will be pre-installed. Mr Goel says the business will still lose about 150 rupees ($2.2) on each phone and hopes the government will step in with subsidies.
To recap, the phone that was launched in February and shown off to the media was actually a different phone altogether. The phone was an Adcom Ikon 4, which was then ingeniously “rebranded” with the help of some white paint and stickers. The company mentioned it was a prototype, and that the final product was different. Adcom threatened to sue Ringing Bells, and also mentioned that the devices sold to them were sold at INR 3,600 ($53.1) per unit. It is likely that Ringing Bells has understated the manufacturing costs of the actual phone in its recent statement, which would make the loss per phone and the total loss all the more befuddling and significant.
But then, there’s this:
Mr Goel says the business will still lose about 150 rupees ($2.2) on each phone and hopes the government will step in with subsidies.
Hah! We discussed some political connections in our prior coverage, but then ruled it out based on the statement of the company’s President Ashok Chadha who said that there is no government subsidy involved with their claims. To an extent, that is true, since Mr. Goel hopes the government will step in with $440,000 to help the company break even on a self-undertaken business venture. We are not sure how that works out for a self-undertaken business venture wanting to claim itself that in the first place, but okay…
The Freedom 251 and all of its ensuing drama does not look like it is going to end with the proper phone deliveries. There are still so many questions unanswered, like how much could the phone hardware be leveraged for software deals (after all, pre-installed apps will have their own memory and performance footprints, and the device is not even a mid level smartphone). Is the user data safe and not being leveraged instead? How exactly does Ringing Bells plan to soak in the massive future debt, and still continue forwards? Is there no political hand behind the initiative, seeing how well it ties into several of the governments ongoing plans (Digital India, Make in India)? What is the real catch behind the $4 smartphone? For now, all we can do is wait for the story to unfold.
What are your thoughts on the Freedom 251? Did you manage to order the device? Would you purchase a $4 smartphone, even if it came with strings attached? Let us know your thoughts in the comments below!