While the world kept asking questions and Indians remained puzzled, a Noida-based startup, promising a Rs. 251 smartphone, on Friday claimed to have received nearly five crore registrations in just two days.
There’s very little information about Ringing Bells or on how it intends the keep the costs down. At the time of writing this article, the company’s website said the bookings for the phone were closed.
If you’re planning to buy one, here’s an explainer to bring you up to speed on the controversy and news surrounding the company:
Who’s behind Ringing Bells?
What has escaped the attention of most people in all the excitement that the news generated is the largely humble background of the company’s founder Mohit Goel.
Mr. Goel used to sit in his father’s small grocery shop in Shamli district of Uttar Pradesh till a few years ago.
“The phone was launched on Thursday at a very big function in Delhi. Frankly, I did not for a moment think that the mobile company, which Mohit told us about few months ago, would be so big,” the proud father Rajesh Goel told The Hindu on the phone from Shamli. More….
Let’s talk some numbers
The much-hyped launch of the world’s cheapest smartphone was thrown into disarray on Thursday as a mad rush to book the device caused the firm’s website to crash within few hours of opening, besides utter chaos at the company’s Noida head office.
To understand the magnitude of the kind of craze it generated, sample this: Ringing Bells said it was received 600,000 hits per second on its website! For comparison, search engine giant Google processes an estimated 40,000 search requests per second.
Why are some calling it ‘mission impossible’?
According to analysts, handset makers and industry veterans, it is not possible to make smartphones at such a low cost.
“In realty it is not possible because even a memory card, a chipset or a processor costs more than the whole handset. I don’t see it as a serious business model. I am also worried about the security of money of buyers who have booked the handset,” S.N. Rai, co-founder, Lava Mobiles, told BusinessLine.
Sanchit Vir Gogia, Chief Analyst at Greyhound Research, said there must be some hidden subsidy without which it is not possible to sell at Rs. 251.
“Selling of smartphones is dependent on at least two factors: pricing and experience. I don’t see such things about this smartphone. Also, the customers they are targeting would not be having credit cards,” said Mr. Gogia.
He also said with the founding members of the company not having any technology background and the handset being loaded with ‘Make in India’ apps clearly indicates that there could be some arrangements (at the government level).
So what’s the catch?
Ringing Bells’ president Ashok Chaddha said the manufacturing cost of the phone is about Rs. 2,500, which will be recovered through a series of measures like economies of scale, innovative marketing, reduction in duties and creating an e-commerce marketplace.“By going for Made in India components, we can save on the 13.8 per cent duty. Also, we will be selling online first and thus save the costs incurred on large distribution network,” he said.
Mr. Chaddha also rejected speculations of the handset being subsidised by the government.
“The phone will be manufactured in Noida and Uttaranchal. Two plants will be set up for Rs. 250 crore each with a capacity of 5 lakh phones. The money will come in the form of debt and equity (1.5:1),” he said.
Mr. Chaddha added the equity is being met by the promoter family of the company that is “engaged in agri-commodities business” in Uttar Pradesh but declined to give further information.
The phone claims to have an Android 5.1 operating system, a 4-inch qHD IPS display, a 3.2-megapixel primary and a 0.3-megapixel front camera.
The device also claims to have 3G connectivity, 1.3GHz quadcore processor, 1GB RAM and 8GB internal memory and supports external memory cards of up to 32GB.
To power Freedom 251, the company has put a 1,450mAh battery and claims to have a service network of 650 centres across India.
Is it true that Ringing Bells showcased a rival company’s handset, as its own?
Mr. Chaddha clarified that “it wanted to show a sample or prototype of what the handsets will look like. This is not the final piece.”
“In view of the shortage of time and given that these were to serve only as prototypes given FOC to a limited list of persons, we went ahead. We would clearly mention that the Final Freedom 251 manufactured/assembled in India would be to identical specs — i.e. no change,” he added.
Why is the company under excise, I-T departments’ scanner?
According to the sources, the I-T Department is looking into the financial structure of the Noida-based company and have obtained documents, including those from the Registrar of Companies (RoC), in this regard.
“Yes, there was a visit from excise department and I-T Department. Since we are planning to achieve milestones under Make in India, Skill India and Startup India. They issued us some guidelines for future and extended full support and cooperation,” Ringing Bells president Ashok Chaddha said in a statement to PTI.