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On July 8, Mohit Goel, CEO and founder of Ringing Bells, the makers of what is being touted as the world’s cheapest smartphone personally hand-delivered the first model of Freedom 251 to a surprised
Birla had to pay Rs 291 for the smartphone, of which Rs 40 includes a delivery charge levied by the company. Like the countless others who had placed an order for the smartphone, she too was skeptical about the phone ultimately reaching her.
(Mohit Goel hand-delivering the first model of Freedom 251 to Ankita Birla. Image credit: Indiatimes)
“I never thought the company would deliver,” she admitted, echoing the thoughts of the entire Indian smartphone market. Her suspicions were only reinforced by all the controversies the company was mired in- from being accused of being a fraud and defaulting on vendor payments to relabeling an existing brand and demanding Rs 50,000 crore from the Indian government to continue its production.
Twenty-nine-year-old Goel, on the other hand is unperturbed and took the opportunity to silence his critics. “Everyone had already declared that I was running a Ponzi scheme. Despite being branded as a fraudster, I did deliver what I promised. With Freedom 251, I proved that it’s possible to make a smartphone n this kind of investment,” he said.
However, Goel’s claim of delivering what he promised- a smartphone, which comes with a quad-core processor, a four-inch screen and front and back cameras- at Rs 251 is a bit premature and should be taken with a pinch of salt, given the unanswered questions plaguing the company, unfulfilled deliveries and its recent plea for government support.
Initially in February, the company had said that it was in a position to deliver 20 lakh handsets by June 30. That stance quickly changed when more than 70 million people jostled to register online for the phone leading to the website crashing in just three days.
That was followed by an incident where the media was given handsets which turned out to be a Chinese-made phone whose brand name- Adcom- had been covered up with white paint on the front, and a sticker hid it on the rear.
The widespread furore also resulted in protests outside the company’s headquarters, multiple enquiries by the police, tax authorities and the enforcement directorate.
Then on July 7, a day before the delivery was set to begin, the company hosted a fresh launch event in Delhi, reiterating the fact that Freedom 251 is very much real. Goel also used the platform to launch a
(Ringing Bells launching their latest offering- Freedom LED TV. Image credit: PTI)
He then made a shocking last minute plea to the Indian government for Rs 50,000 crores.
In a letter written to the Prime Minister's Office dated June 28 asking for a meeting with Narendra Modi , Ringing Bells said: "We have brought 'Freedom 251' which we offer on 'Cash on Delivery' terms but we have a gap between the BOM (Bill of Materials) and the Selling Price. We, therefore, humbly request government support to actualise the objective to cascade the availability and usage of
According to Goel, he had initially faced a loss of Rs 930 on each handset for which parts were imported from
"I recovered Rs. 700-800 from app developers and from the revenue generated through advertisements on the Freedom 251 website. After selling the device for Rs. 251 (cash on delivery), the total loss per handset is expected to be in the range of Rs. 180-270," Goel claimed.
He further added that if the government is willing to dole out that amount, he can ensure that 750 million of India's population would become part of digital India by owning a smartphone at Rs. 251.
If that wasn’t all, Goel also announced that 90% of the proceeds of the sale would go to charity right after he admitted that Ringing Bells is a loss-making venture due to Freedom 251 and that the company would take slightly more time to deliver on its bookings apart from seeking government support to do the same.
(Mohit Goel with a Freedom 251 handset. Image credit: PTI)
At this point, we have umpteen questions- the chief being- if we were to assume that Ringing Bells is indeed cash-starved and in dire need of government support, how does Goel explain getting the money required to launch six new phones and a LED TV? It should also be noted that the company claimed to already have 1lakh units of the cheap Freedom LED TV in stock.
To this, Goel replies that his assembly partners and his distributors have invested in the company making the production of the LED TV and other devices possible. “We are looking to make 15% profit on the LED TVS,” he added.
While the company’s befuddling maths especially, the one justifying the Rs 251 tag never made sense, as most industry experts maintained that the cheapest variant of a phone with these kind of specs should cost Rs 2,500 at least, Goel’s recent claim of Ringing Bells giving away 90% of its proceeds to charity is also devoid of all logic.
How can a company reeling in losses and desperately seeking Rs 50,000 crores from the Indian government afford to make any claims of charity?
That’s not even the scariest part. The most outrageous part of the entire Freedom 251 episode is that none of the founders of Ringing Bells (including Goel) have any technology background.
(Mohit Goel sits in the Ringing Bells office with the company's latest phone offerings. Image credit: BBC)
This begs the most important question- What exactly is the Ringing Bells end-game?
A common theory floating around is that the company is okay with making losses on Freedom 251 as long as it is making a splash in the market (which by the looks of it, it successfully is). A few months later, it will start introducing other high-end devices- including LED TVs and smartphones and look to selling them well due to their already established name in the market.
(At the time of publication of this article Ringing Bells had already shipped 4,240 units, The remaining 760 units are in the process of being shipped to Uttar Pradesh, where Goel himself intends to visit some cities)