How many users does Reliance Jio have?
How many users does Reliance Jio have?Reuters

After Reliance Jio opened its unlimited data trial offer to all 4G smartphone users in India, the sales of RIL's LYF smartphones seem to have taken a hit. Market research firm CMR's quarterly India LTE devices report revealed that the sale of LYF smartphones will continue to decline in the coming months.

Before RIL's annual general meeting on Sept. 1, when the company's chairman delivered a 45-minute speech to announce the expansion of its Jio trial through a "Welcome Offer" to anyone with a 4G smartphone in India, Jio 4G SIM cards were exclusively available with LYF smartphones. That helped LYF scale up to the top three smartphone brands in India in the second quarter of 2016.

Samsung secured the largest share of 41 percent in India's 4G smartphone market, while Micromax and LYF came at the second and third spots with 8.6 and 8.5 percent shares, respectively. According to CMR, more than 18.2 million 4G devices were being shipped in the Q2 2016 in India, a remarkable increase compared to Q1's 15.4 million figure. While tablets and data cards acquired 0.6 and 1.6 percent share of the entire 4G device market, smartphones took the lion's share with 97.8 percent.

Jio's preview offer was a strong selling point for LYF device. Now that Jio connections are available to all 4G devices, the exclusivity is lost and LYF's smartphone sales will suffer. However, CMR noted that LYF's tablet and Mi-Fi device shares are likely to increase in the coming quarters.

In tablets, Samsung once again led the market with a dominating 40 percent share, while Apple trailed not far behind with 30.79 percent share. In the data cards category, Samsung, ZTE and Micromax held the top three ranks, with 63.4 percent, 20.2 percent and 16.43 percent, respectively.

With the availability of Jio's SIM cards to all smartphone owners, CMR expects to see a change in the trend with the likes of Vivo, Oppo, Gionee and others likely to double their shipments.

"While in the Smartphone space, we may see about 25-30 4G Smartphone models with different variant getting launched in the second half of this year and content and video consumption getting a boost with 4G. And to fulfil the tremendous demand for 4G, the second tier of handset brands such as Vivo, Oppo, LeEco, Xiaomi, having created a niche for them in the India market, should explore more and take on the 4G wave," Krishna Mukherjee, CMR Analyst for telecoms, said in a statement.

Faisal Kawoosa, the Principal Analyst for telecoms at CMR, expects the 4G smartphone base to reach 125 million by the end of this year. Jio expects this base to touch 250-300 million by the end of 2017, acquiring at least 70-80 million users on its network.