Search giant Google has partnered with Indian phone vendors such as Micromax, Intex, Lava, Karbonn, among others, to launch cheap smartphones based on its Android Oreo (Go edition) operating system, say multiple sources.

Micromax is expected to launch its phone based on Android Oreo Go at around Rs 2,000 apiece ($31) later in January with other vendors to follow in the weeks after. The average price of a 4G smartphone today is around $100 (nearly Rs 6,400).

The Micromax launch “might be on Republic Day or around it,” said a source close to the company, not authorised to comment on the subject.

Phones from other Indian handset makers will follow. “We expect Android Oreo (Go edition) devices to launch in early 2018,” said a Google company official, asking to stay anonymous.

Android Oreo is the eighth version of the mobile phone OS. The Go variant is aimed at phones with memory less than 1 GB and can be configured for use with a handful of Go versions of Google’s main Google app, maps, YouTube, email, assistant and other apps. In presenting a lightweight option to phone makers, Google enables them to cut down on not just memory but also processor capacity — helping them to come up with cheaper smartphones.

The Google official added, “As more users come online for the first time, the number of entry-level Android devices available has been rising quickly, and is expected to make up a much larger percentage of all smartphone sales going forward. Given the acceleration, we thought it is time to take our investment to the next level.”

Xiaomi on Monday announced the rollout of the Android Oreo update on its Mi A1 phone making it the first sub-Rs 15,000 phone to have the OS.

Google CEO Sundar Pichai, during his India visit a year ago, had said that the cost of entry-level smartphones should come down to $30 (Rs 1915). For a country like India, $30 phones can “unlock” the smartphone market, he said. “The right price point for smartphones in India is $30, and pursuing high-quality smartphones at the price point will unlock it even more. Hopefully, we can all push and make $30 smartphones happen,” Pichai said in different interviews.

Ray of hope for Indian vendors

The Oreo Go OS is being first adopted by Indian handset makers who have traditionally targeted the feature phone market. A senior executive with an Indian handset brand said that Oreo Go offers a chance to Indian vendors to bounce back after the Chinese took over the phone sales league tables here. Data from Massachusetts-headquartered research firm IDC shows the share of Indian phone makers at 15% of the smartphone market. Two years ago, it was 50%.

The Chinese are more focussed on the top of the smartphone pyramid, the executive said. “The Chinese companies are not looking at the base of the pyramid actively.”

The numbers stack up well for a pivot of the smartphone market towards affordable devices in a country where three-fourths of the population accounts for just about one-third of income generation. About half the phones sold in India today (smart and feature phones included) are in the sub-Rs 2,000 range — making such a price a compelling proposition in a price-sensitive market.

In its report ‘Connecting the Next Billion – Propelling towards $5T economy‘, consultancy Deloitte India ranks India No. 36 globally in internet inclusion (based on availability, affordability, relevance, and readiness). The internet penetration in rural India stands at 16%; the country’s average is 33%. Deloitte estimates that net addition to the smartphone volumes will be 350 million by 2020.

With cheap smartphones, Google and the phone vendors hope to ride the wave of mass scale internet access on mobile phones in India. From a monthly consumption of 20 crore GB of data about 16 months ago, Indians now consume over 150 crore GB a month making the country No. 1 among mobile data consuming countries. Much of this change is credited to aggressive data pricing plans by Reliance Jio, which launched services in September 2016.

Like Mukesh Ambani, chairman of the Reliance group of companies, Google is targeting India’s 500 million feature phone users with Android Oreo Go. It’s a segment Ambani went after with the KaiOS-based JioPhone. Even Jio is said to be coming out with a Go-based cheap smartphone with not enough apps around KaiOS – leading Jio to look at Google optimised OS. Jio had been in discussions with a Facebook, WhatsApp, and Google for popular apps to work on the KaiOS-based JioPhone.

“Other apps will be coming soon. Many of our developer partners have already optimized their apps; developers can learn more about our recommendations for best practices called Building for Billions,” the Google official said.

Google has decided to put the entire catalogue of Google Play on Android Oreo (Go edition) devices, but apps that are optimised for entry-level devices will be given extra visibility in the Play Store app.

The Oreo Go affordability

Experts said that without Oreo Go, it was nearly impossible to bring down the price of the phone without compromising the quality of the device. “There were restrictions and optimisation wasn’t there,” said Faisal Kawoosa, principal telecom analyst with Gurgaon-headquartered CyberMedia Research. “There was no way Indian handset makers could make low-cost phones on the regular Android OS… That requires more memory, more processing power, which comes at a cost.”

In India, six out of 10 devices are sold below Rs 5,000 and five out of 10 are in the sub-Rs 2,000 band. “That’s quite a big chunk of customers,” said Jaipal Singh, senior market analyst (client devices) at IDC.

One reason why Singh said that feature phones still have such high adoption in India is not just because of the price, but also because of the durability. To bring down the smartphone price handset makers compromise of storage and processing speed, which reduces the life. With a new ecosystem of devices, software and chipsets tailor-made for cheap phones, the durability will increase.

Singh added that Google is building the ecosystem along with the operating system. “Chipset makers like Qualcomm and MediaTek are optimising chipsets (for Oreo Go), which will do away with problems of hanging and heating up. It will also give better experience over data.”

This is not the first time Google, which makes more than $1 billion in India revenues, is trying attract the lower-affordability segment with the Android One platform. Google claimed that it is the purest form of Android that would always keep the operating system fresh and updated.

The product was launched by Google CEO Pichai when he was Google’s chief product officer in 2014, keeping India as the standard market for development. When the product was launched it went to emerging countries like India, Pakistan, Bangladesh, Nepal, Indonesia, the Philippines, Sri Lanka, Myanmar, among other countries.

Over time, Android One lost its charm. Oreo Go is not an extension of Android One. It is specifically designed for the next billion users, insisted the Google official quoted earlier. “It is a new experience for devices having memory between 512MB and 1GB, and it also comes with a suite of new Google apps that are built to run faster on devices with limited hardware capabilities.”

The official did not divulge details of the partners it is working to bring out the Oreo Go devices with but clarified that the devices will not be limited to India. “Partners are actively working on devices that will be running Android Oreo (Go edition), to be launched around the world. These devices will naturally range in price,” he said.