And just how does he bring down the cost to Rs 251, and also earn a profit? "Economies of scale gets it down to around Rs 1,200, and thereafter an online sales model cuts down marketing and sales expenses, giving us further savings," he says. And to this we will add marketing piggybacks from companies whose applications we load on the devices. We will save around Rs 300 per device more through this," Chadha says
I am not a businessman / investment analyst but surely this doesn’t add up. I am well aware that marketing costs would add to the final cost of any product… BUT saying ‘no marketing and sales expense will bring down the cost of production’ IS ridiculous. Saving on marketing and sales expenses CAN NOT impact the cost of material required to manufacture the bloody phone! Yaar… bakwaas karne say pehle thoda soch liya karo!
Perhaps there are other ways that Ringing Bells have managed to lower the cost:
- Perhaps it’s a stolen shipment that is being re-branded/white-labelled (It is a possibility).
- Perhaps there is some ground breaking manufacturing / assembling technique that has been adopted which the company doesn’t wish to disclose.
- Perhaps it’s refurbished hardware / chipsets / handsets.
- Perhaps someone got lucky at bidding on some locker / storage facility and got boxes of chipsets / mobile phones.
- Perhaps it’s hardware with manufacturing defects / rejected units that have been acquired from the manufacturer.
Numerous possibilities. Several plausible scenarios. The part that is NOT plausible is – A saving on marketing/sales expense bringing down the cost of raw-material / production. That statement simply highlights that this ‘scheme’ is a scam.
That said - we don’t NEED more handsets or cheaper handsets. What we do need is reliable coverage for the existing handsets. Let’s get through that first. The world doesn’t need yet another cheap smartphone. We could do with smarter people though.
Dikhaawon pe mat jaao… apni akal ladaao.