In 2016, when Mr. Mukesh Ambani announced the launch of Jio, it was an iconic announcement in Indian history that changed our lives forever. But while we the consumers were having the time of our lives and enjoying the newfound luxury of the internet, that same year was a nightmare for the rest of the telecom companies. Their stock prices came crashing down.

Several giant companies shut down and the telecom space itself which once seemed crowded has now transformed into a deserted battlefield with only a few players left. While all these companies were going bankrupt, Airtel was the only company that stood strong all through this brutal telecom war and today it is not just surviving this Jio wave, but even went one step ahead to outperform Jio in many key areas.

As of January 2021, Airtel added over 300% more wireless users than Jio. In fact, as of February 2021, Airtel is the top telecom company in terms of active subscriber market share.

The question is, what is so special about Airtel and Jio’s rivalry? How are they so far ahead of their competition? And most importantly, what are the business lessons that we can learn to apply in our own business?

The answer to these questions lies in one of the most important strategies of the 21st century, which is a product-service ecosystem. This business strategy was pioneered by the legend Steve Jobs himself. Creating a product service ecosystem is where a company tries to place its products so strategically into the lifestyle of the consumer that over the due course of time, the customer ends up buying the products from the same brand or finds it extremely difficult to switch to another brand.

The easiest way to understand would be to understand how Steve Jobs created an ecosystem for Apple users. This ecosystem model of Apple primarily consists of three types of elements. The first is the entry-level products. The second & third are the retainers and Upsell respectively.

If you buy an iPhone, that's your entry-level product. Then you start using Facetime and iMessage. That is when you are making an investment into the product in the form of chats and file sharing. Now, because you can't get your iMessage on Android, your habit of addiction to iMessage and other services make you cling to Apple.

Once you get in the hand of these retainers, upsell happens. In this case, if you got an iPhone 10, you are more likely to buy iPhone 13 this year. Why? Because your phone might have gotten outdated, but you still want to hold on to your investment which is in the form of iMessages, other services, and most importantly, the habituation of the user interface.

If you observe the happening around yourself, you will notice that Jio and Airtel are no longer just telecom companies, but an entire digital ecosystem. They just want to position their products in some of the most crucial aspects of your life. This is the billion dollars business link hidden inside.

When you buy Jio SIM, you also get offered Jio TV, when you buy a Jio broadband connection you also get a set-up box as an extended offering at a very cheap rate. These days if you buy Mi TV, you will get a Jio-Fi connection as well. So you see, you don't buy products, you buy the Jio ecosystem itself.

This is how Jio is establishing its first layer of the ecosystem by easily placing its entry-level products in an easily accessible manner. The most crucial reason why Airtel survived is that, Airtel realized the importance of the ecosystem and they started building this ecosystem faster than any other player in the market.

The question is, how did Airtel transition into building this ecosystem so quickly? As it turns out, Airtel had already done a phenomenal job in its existing service. Back in 2016, their DTH service was one of the strongest contenders along TATA sky with market share swinging between 20% to 25%. Airtel is already delivering far better service to its customers as compared to the rest of its competitors.

Last and most importantly, the foundation for Airtel broadband was already laid in 2017, when they had 21 lakh connections already in place. Now if you compare this with the rest of the competitors, you will see that they were severely lagging in multiple aspects compared to Airtel. Vodafone and Idea did not have any DTH presence at all. Videocon had a good DTH presence but did not do well for mobile users.

Thirdly, TATA sky was the market leader but TATA Docomo was a failure. BSNL wasn't even in the game, to be honest. But regardless of that, this is where Airtel took some very bold steps to hit a home run. They went on to shopping and acquired small players like Videocon telecommunications in 2016, Telenor and Tata Teleservices in 2017. This gave them 2 major benefits:

• It brought more spectrum and prevented Jio from acquiring these companies. They decided to narrow their focus down to only high-value customers and they imposed a minimum recharge limit. As a result, Airtel lost 4.8 crore users in the December quarter of 2018 itself (Read more). But this ended up saving them a ton of resources and improve their profitability.
• They started integrating their services to build an ecosystem just like Jio. They started offering a setup box, a broadband connection and giving exclusive access to services like wink music.
• Here is when the game started changing. When a company starts integrating multiple products in its ecosystem, apart from customer retention, ecosystem strategy gives the brand 3 incredible superpowers.

It offers multiple channels for the brand to penetrate the lives of the customer and to present entry-level products. If iPhone falls, Apple can always come back to MacBookPro. It gives you the superpower of using a loss-leader strategy.

This is a technique to sell low-margin products at loss to get customers to buy high-margin products.

It allows you to break into your rival's ecosystem. This is exactly what happened during the pandemic. Airtel used all of its superpowers to break into the Jio ecosystem. The question is, what was so special about the pandemic?

As we all know, pandemic skyrocketed the demand for high-speed broadband connection because of major lifestyle changes in the consumer's life in the form of work from home and education from home. Airtel used its first superpower of existing B2B enterprise clients and offered all the companies of service to provide all their employees with speed broadband connection. Along with this, it also spent tons of money and rapidly partnered with local cable operators and offered them lucrative incentives to lay their wires even in tier 2 and their 3 cities and they started these broadband customers asap.

Since it could not reward free SIM cards to get into a customer's lifestyle, Airtel used its broadband as its alternative and positioned it as an entry-level product. Secondly, when it offered the customers a broadband connection, it also came with an additional offering with sometimes called Airtel Xtreme setup box which gives you one month of DTH HD pack free plus Prime Video, Disney, and Hotstar even at the base level plan.

Airtel is using its second superpower of the ecosystem strategy that is the loss leader strategy. And lastly, by executing these strategies very well Airtel successfully placed its products even in those households which already had a Jio SIM.

That means Airtel had started breaking into Jio's ecosystem. In September 2020, the number of total broadband subscribers grew by 95 lakh. While Airtel captured 70 lakh subscribers, Jio ended up capturing nearly 17 lakh subscribers. A large number of these people have also been offered DTH service and even an Airtel sim card.

Not so surprising, but even in the wireless segment, Airtel is catching up very quickly beating Jio regularly by a large margin. In fact, in January 2021 Airtel added more than 15.9 lakh wireless subscribers whereas Jio on the other hand only added 19.5 lakh, new users. That is a growth rate difference of 300%.

This is how Airtel is being a Trojan horse in the Jio ecosystem. Now that all eyes are set on Jio, there is a chance that Airtel ended up doing something incredible, especially with its aggressive integration strategy.

Lesson:

1. In this digital world that we live in you will more often than not find two types of products in the market, one is a stand-alone product and the other is an ecosystem product. And you already know how one is more powerful than the other. From the business point, you should look to build an ecosystem for your products as well. This will help you avoid major threats from your competitors.

2. As of now both Airtel and Jio have made entry-level products and they have yet to have strong retainers in place. So always remember, while entry-level products give you the customers, only retainers and upsell can drive exponential revenue growth. Keep an eye on how both these companies are building retainers to upsell their products

3. While Airtel is just confined to telecom, broadband, and DTH, Jio seems to be building a much bigger ecosystem for itself with services like JioMart, Jio health club, Jio Krishi, and whatnot. Question is, Is Jio building such a humongous ecosystem that Airtel's ecosystem product could shatter or with a finger snap, or does it purposefully want Airtel to exist in the market to avoid monopoly problems.