RELIANCE V/S AMAZON - HEADING FOR A HEAD-ON!

Data is the new oil.

That’s the one big message we got from the AGM of Reliance Industries yesterday. And that could explain why the AGM was more about Jio and very little about petrochem.

The other big message we deciphered – this is a direct had-on with Amazon’s Jeff Bezos. Two very rich and very powerful men, are going to collide for a share of the juicy Indian market.

Bezos takes the crown as the richest man on earth but in India, it looks like Mukesh Ambani would do everything and anything to keep him down and get ahead.

In the AGM we could easily glean that all the three areas – e-commerce, cloud and content, Ambani has made huge plans and it could easily disrupt the “apni dukaan” attitude of Amazon for India. When Ambani makes plans, they are always big and money is never a constraint. We have seen how Jio changed everything for the telecom companies, still reeling under the disruption.

So for Amazon the disruption is going to be big and while we might do some chest thumping and say how an Indian going to give the richest man and an American a run for his money, lets not forget the amount of employment which Amazon has created in India. And more importantly, Bezos was the first to give the world this e-commerce platform, building it to where it is today and what Ambani or Ali Baba or anyone else will now do it go local or build over what Amazon did first. So Bezos created a revolution and Ambani will now prevent him from being a monopolistic player.

E-commerce:

Today for most of us urbanites, shopping by default means Amazon. That’s the kind of impact it has made with its reach to the vendors spread across India. But what we have often missed is the immediate delivery from a shop close by or a specialty which is available at the corner family-run store close to you. And that’s what Ambani is going to provide – his Retail plan, called New Commerce will link its high-speed digital platform to kirana stores, selling groceries and sundry. This is a very very big development as what Amazon is trying to capture is only 10% of the organized market; Ambani is looking at linking 90% of India’s $700 billion retail market on his e-commerce platform.

Strangely enough, or should we say, knowing how the wind is blowing, there are hush-hush whispers doing the corporate corridors of Amazon exploring the option of buying a 26% stake in Reliance Retail.

Digital:

At the AGM, Ambani announced that Jio Fiber will be launched on 5th Sept – this is the broadband internet space.  The monthly price plans for connections would range between Rs700 to Rs10,000. And giving an offer which will be hard to resist, under the company’s “Jio Fiber Welcome Offer,” customers who buy Jio’s internet connection will get an LED television set for free. Its pricing plans will be at less than 1/10th of the global rates to make it accessible for all. 

But the biggest of all – the company announced a partnership with Microsoft's Azure cloud platform. This is a direct competition with all things on the web hosting and data storage – an area dominated by Amazon Web Services (AWS) and Amazon’s biggest business. And the pricing as usual is rock bottom –  Jio plans to provide free connectivity and cloud infrastructure to start-ups and a "bundle of connectivity, productivity and automation tools" to micro, small and medium business for as little as Rs.1,500/month. This is sure to spark a price war in the Indian cloud market and this will probably the biggest disruption for Amazon, more than retail and content.

Content:

Jio Fiber customers, who opt for the company’s plans, known as Jio Forever plans, apart from the free LED TV will also get a 4K set-top box absolutely free. Jio Fiber plans will come bundled with subscriptions to most leading premium OTT applications.

That’s not all – it has announced Jio's “First-Day-First-Show”, which promises day-and-date movie releases for premium broadband customers starting mid-2020. Apart from being a threat to cinema screen owners like PVR and Inox, it could hit the streaming business of Amazon Prime where the moment the theatrical window closes, which is two months for Hindi movies and one month for South movies, it  is now streamed on Prime and Netflix. Once producers enter into a deal with Jio for the “first day first show” deal, the streaming sector could be impacted.