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Micromax: Capitalising on Emerging Market Trends Company Stories, April 28, 2015 Micromax: Capitalising on emerging market trends Company Stories, April 28, 2015 Home-grown mobile handset company Micromax has come a long way since it began operations in 2008. According to research firm Canalys, the Indian mobile handset-maker overtook Samsung as the leading player in the quarter ended December 2014. Micromax accounted for 22 per cent of the total smartphone sales in India during the quarter as compared to Samsung’s 20 per cent during the same period. Overall, 21.6 million smartphones were sold in India during the quarter ended December 2014, which was a 90 per cent increase over the same quarter of the previous year. Micromax’s success can be largely attributed to the introduction of affordable feature-rich smartphones for price-conscious Indian buyers. As per Canalys, about a quarter of the smartphones sold in the country in the quarter ended December 2014 were priced at under $100 and 41 per cent were in the $100-$200 range. Unlike established international brands and a few of the older home-grown players, Micromax was quick to leverage the growing trend of smartphone adoption. It is currently providing customers a wide choice of smartphones priced between $37 and $323. Backed by a strong product portfolio, over the past few years the company has managed to capture significant market share from established international players such as Samsung and Microsoft (erstwhile Nokia), as well as home-grown brands like Karbonn and Lava. According to the Registrar of Companies, Micromax reported a revenue of Rs 71.41 billion and a net profit of Rs 2.84 billion in 2013-14. Since its inception, Micromax has taken the lead in product innovation by being the first to identify emerging market trends and capitalising on available opportunities through disruptive marketing strategies. For example, it became the first Indian handset-maker to launch a 4G-enabled smartphone, the Yu Yureka, in February 2015, in anticipation of the widespread roll-out of 4G networks by service providers. The phone, priced at Rs 8,999, offers good value for money. It is powered by a Qualcomm Snapdragon 615 octa-core processor and comes with a large 5.5 inch screen. Over the next few months, the handset-maker plans to launch three to four new 4G devices at various price points, thereby offering a wider choice of products to buyers. In addition to driving 4G device sales, Micromax is also making a smart move to disrupt the 3G device market by launching two new entry-level smartphones – the Bolt S300 and Bolt D320. Both these devices are priced at Rs 3,300 and indicate the company’s move to democratise technology, making 3G available to buyers at an affordable price. Another factor that has contributed to Micromax’s success in the Indian handset market is the company’s proactive approach towards upgrading and improving its existing product offerings through exclusive 1 / 4 Micromax: Capitalising on emerging market trends Company Stories, April 28, 2015 tie-ups with both hardware and software vendors. For instance, the company claims to be the first home-grown brand to have introduced Windows Phone devices in the country – the Canvas Win W121 and Canvas Win W092 – priced at Rs 9,500 and Rs 6,500 respectively. The two launches demonstrate Micromax’s intent to provide unique offerings by shifting away from the tried-and-tested Android operating system (OS), which dominates its current smartphone portfolio. The launch of Windows-powered devices aims to leverage the opportunities offered by the growing demand for smartphones that support huge 3G and 4G data consumption. Windows-based products are fundamentally data-centric devices and, therefore, encourage higher data usage by customers as compared to other OS platforms. Further, the Windows-based W092 smartphone has intensified competition as it has been priced lower than the Lumia 520. Challenges and the way forward Despite experiencing early success and creating a strong brand name for its high quality yet affordable smartphones, Micromax has been facing a number of challenges. The company, along with international brands such as Samsung, Sony and Apple, is facing intense competition from Chinese handset-makers including Lenovo, Gionee and Xiaomi. Until a few years ago, consumers were apprehensive about Chinese devices, which were considered low quality, and therefore did not command a significant share in the Indian handset market. However, with the introduction of high-quality products at attractive prices, Chinese handset vendors have succeeded in changing this perception among Indian buyers. In the past few years, Chinese handsets have flooded the Indian handset market, posing a serious challenge to established brands including Micromax. According to the International Data Corporation, Chinese vendors have doubled their share in the Indian 3G and 4G handset market in a year’s time. In fact, in terms of growth percentage, Chinese brands are growing faster than Indian brands. One of the biggest challenges facing Micromax is that in order to compete with affordable feature-rich Chinese smartphones, it has limited scope to cut down prices as it mostly imports handsets from China. With Chinese brands offering more features at reasonable prices and other Indian brands too entering the low-cost smartphone market, Micromax will have to come up with innovative strategies and products to stay ahead. As a result of the growing intensity of competition, the handset-maker is revisiting its market strategy and looking at potential growth areas beyond smartphones. Signifying a big change in its approach towards the Indian handset market, Micromax, in November 2014, established a new company, YU Televentures, to make premium mobile phones and other devices. The company is a 100 per cent subsidiary of Micromax and launched its first 4G device, Yu Yureka, in 2015, which received an encouraging response from buyers on Amazon. Howver, despite the successful debut of YU Televentures with its flagship 4G device Yu Yureka, many industry observers view Micromax’s move to set up a separate 2 / 4 Micromax: Capitalising on emerging market trends Company Stories, April 28, 2015 company with scepticism. This is because there could be a scenario where Yu Yureka and yet-to-be-launched smartphones by YU Televentures may end up cannibalising Micromax’s popular brand, Canvas. At the same time, the new company does not seem to be a threat to other popular Chinese brands, which continue to offer competitively priced devices. Nor is it a potential threat to established brands like Samsung and Apple, which continue to sell high-end phones. Despite these misgivings, Micromax appears to be upbeat about the future of YU Televentures and is preparing to foray into the wearable devices segment as well. Over the next few years, Micromax is planning to transform itself from a devices company to a connected devices and services company. Following in Chinese vendor Xiaomi’s footsteps, Micromax is focusing on developing a strong software and applications ecosystem. The company is weighing the option of developing locally focused software to complement its existing product portfolio, which supports 21 local languages. Further, Micromax plans to get on board a large number of developers to strengthen and expand its existing games line-up and application store. It is also working towards ramping up its mobile phone assembling facility. At present, Micromax assembles about half a million handsets a month using imported parts from China and Taiwan at its factory in Uttarakhand. The company has plans of building a second assembly plant in Rajasthan. Besides targeting a larger share of the Indian smartphone market, Micromax has big plans for the international market. The company already has a strong presence in countries such as Bangladesh, Nepal, Sri Lanka, India and Russia. Over the next year, it intends to launch its devices in up to 10 other international markets. To achieve its ambitious expansion objectives, Micromax requires funding and is open to options such as the launch of an initial public offering or sale of equity to a global technology group. Recently, there have been reports of Japanese mobile telecom firm SoftBank Corporation being in discussions with Micromax to buy a 20 per cent stake in the latter for up to $1 billion. The investors are likely to value Micromax at around $5 billion. In the long run, Micromax will continue to focus on increasing its dominance in India, which accounts for the world’s second highest number of mobile phones. In spite of the competition, the handset-maker remains bullish about building on its success story in the domestic handset industry and replicating the same in other emerging mobile handset markets. About Us We are Hiring Contact Us 3 / 4 Micromax: Capitalising on emerging market trends Company Stories, April 28, 2015 Subscribe Privacy Policy Advertise Terms & Conditions Copyright © 2010, tele.net.in All Rights Reserved 4 / 4 .
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