India had a sort of a mini revolution when Mukesh Ambani decided to make data and voice calls free for everyone. Predictably, telecom operators took a major hit and the last time I checked, most of the major players were rushing about negotiating mergers and acquisitions. Well, it seems like the router market has been similarly affected.
According to a report from the International Data Corporation, router unit shipments saw a significant 19 percent fall in router unit shipments. This also led to a 22 percent fall in vendor revenue in the last quarter of 2016. The culprit? Look no further than the hotspot capability in Jio-sim equipped smartphones. Demonetization was also said to have a hand in the fall in revenue.
All the major players, including the likes of Netgear, Digisol and TP Link have had a sharp drop in demand from both household and office users. Both of these segments used routers priced around INR 5,000 and considering that Jio hotspots often served the purpose just as well, it is easy to see why the drop in demand occurred.
Netgear country manager for India & SAARC Marthesh Nagendra confirmed as much when he told ET:
The low-end router market is severely affected by free data (offered by Jio).
Interestingly, the worse occurred between the months of November 2016 and January 2017 when even entry level routers were stuck with distributors. Online marketplaces such as Amazon and Flipkart suddenly found themselves holding huge stocks of inventory that they were unable to sell off.
And of course, JioFi Hotspots devices with their hugely discounted data packs had a role to play as well. The company managed to sell off around 3 million devices between 2016 and 2017 with over 50 percent sales occurring in the last quarter! And the slowdown is expected to continue until at least June.
And you know what? Jio is currently offering over 100 percent cash back on a router that costs INR 1,999. And you get 10 free vouchers of 5GB each that can be used over a period of 10 months, once the current offers expire. It is easy to see why people would prefer Jio’s routers over those of establisher players. Sure, there have been reports of network and connectivity issues. However, judging by the kind of response and the IDC report, it is clear that the company has been doing well regardless.
