It all started with a truck battery!
In 2007, a truck battery inspired Rahul Sharma, co-founder, Micromax Informatics Limited to foray into mobile handset business. In the powerless village of Behrampur, West Bengal, he saw a PCO being powered by this truck battery. The PCO owner carried this battery to an adjacent village 12 KM away every night to charge it. The routine was repeated all throughout the year. The best part was, this operator made a tidy profit too! In that dusty village, Mr. Rahul learned first-hand that “Necessity is the mother of invention”. Soon, he convinced his partners and Micromax launched their first phone with a month long battery backup. The phone was a hit in a nation suffering from chronic power shortage where electricity for charging a cellphone is a luxury in many parts of the country.
Filling the gaps.
The year 2008 in India was the pre-android era. The booming mobile handset market was dominated by big international players like Nokia, Samsung, LG and Sony Ericsson. Nokia alone commanded around 80% of the market share with Samsung beginning to grow new fangs with the success of its Corby and Guru series of feature and basic phones respectively.
To think that a local player could enter this market, let alone make a dent in the shares of the Big Four was unimaginable. Rahul Sharma, Sumeet Arora, Vikas Jain (co-founders, Micromax) decided to do the unimaginable.
The global handset brands loved to sell to Indians, but shied away from trying to fathom what Indians actually needed. They brought to India the handsets that were designed keeping European and American markets in mind.
The middle class Indian consumer did not find much use of increasing megapixels, sharper screens but falling battery life. Micromax filled that gap by launching handsets with long standby that performed the most basic functions required of a cell phone without any added bells.
Micromax later realised that many people, especially youngsters carried multiple handsets to keep their work and personal lives separate. It launched India’s first dual sim phone. This particular innovation was what turned the tide for them. Suddenly, everyone wanted to own one of these new wonder phones. While Samsung shuddered, Nokia shrugged. Samsung was clever enough to soon launch dual sim handsets. Nokia, on the other hand thought these were cheap gimmicks. It took Nokia almost two years to come up with its first dual sim phone. By then, the tables had turned. Samsung was now breathing down Nokia’s neck and Micromax, the Indian company which sold rebranded Chinese phones was gaining market share, respectability and acceptability at a pace that made every market analyst sit and take note.
From Chinese to Indian.
Micromax’s tagline is “Nothing like anything”. In the past years, they have tried to live up to their words.
Not only have they bulldozed their way in the Indian mobile handset market, they have ignored the temptation of being complacent like Nokia and other smaller Indian players like Karbonn Mobiles and Maxx who looked promising at one point of time but turned out to be mere shooting stars.
As Rahul Sharma, co-founder, Micromax, had said in an interview: "The strategy is simple: create high volumes, reach the customer base through effective distribution, and give them products that are innovative and cost-effective. Finally, create a strong brand."
The strategy of Micromax has been to look at four critical components of a phone which also determine its price. They are- the screen, the camera, the chipset and the memory used in the device.
Micromax has reinvented itself. They have tried to balance profitability with quality and succeeded to a large extent. Initially, they ordered most of their handsets from Chinese OEMs, rebranded them and sold them at prices half of what companies like Samsung charged for phones with similar specifications. To shed the ‘cheap’ brand tag, Micromax made sure to partner with only the Tier I manufacturers in China. These were the same manufacturers who produced handsets for Samsung and Apple.
To keep the costs down, they ordered in bulk, in tune of 500,000 handsets at one go. This obsession with volume growth led to better cost efficiencies. In 2011 alone, Micromax shipped four million handsets worldwide and captured 8 per cent market share in India.
All good things must come to an end. The days of cheap labour in China is numbered. At Shenzhen, where some of China's largest electronics manufacturers are located, the minimum wage is set for a 13.3 per cent hike from this year - a move that could have a ripple effect across the world's major technology companies.
Micromax has understood this and now focuses on building manufacturing units in India. Its manufacturing unit in Himachal manufactures tablets and LEDs. It has also started importing components from China and assembling handsets in its Indian plants to bring down import costs.
Android on a dozen canvasses.
Canvas and Bolt series phones.(Source: Rediff)
Since 2008, Micromax has consistently tried to move up the value chain. What started with a very basic handset has metamorphosed into a comprehensive suite offering handsets starting from Rs 1,000 to Rs 20,000. Micromax has taken the android segment by storm. Its low-end android phones are marketed under the ‘Bolt’ line. Under the ‘Canvas’ line, Micromax offers android phones with high end specifications at prices of mid-range devices.
Micromax has grown confident about itself. It launched the Micromax Canvas HD, its first android phone with a full-HD screen just a day after Samsung announced Galaxy Grand. On paper, Canvas HD beat Galaxy Grand as far as specifications go. The price though was less than Grand (Rs 15,000 compared to Grand’s Rs 21,000).
Micromax offers easy on pockets android phones for price sensitive Indian consumers. That’s why it’s a big hit among college students who have limited purchasing capability.
Don’t keep all your eggs in the same basket.
The leaders at Micromax know that every product has a lifecycle. In the technology world, products rise and fall every fortnight. From floppy discs to solid state drives (SDDs), from Walkman to iPods to iPhones, from PC to tablets, technology firms that do not adapt quickly are bound to fail.
|Canvas Laptab( Source: FoneArena )|
This is why they are trying to diversify. What started with phones has now moved to android tablets, LEDs, and data cards. At the recently conclude CES in USA, Micromax showcased world’s first dual-OS tablet. They are calling it Laptab. This device can boot on both Windows 8 and Android. This innovative product helped Micromax grab a lot of eyeballs.
Micromax recently collaborated with Hollywood star Hugh Jackman to launch their latest flagship phone- Canvas Turbo. They have also forayed into Russia.
All this, coupled with the numerous cricket series sponsored by Micromax has helped them to become a household name as well as gain acceptability.
The present and the future
As per IDC, Micromax has a 22 per cent market share in the smartphone segment for Q2, 2013. They are now the second only to Samsung, with Nokia trailing far behind. Micromax also ships the largest number of tablets to India. What was once an impossible dream is now a reality.
But all’s not rosy at Micromax. On 28 July 2011, Micromax withdrew its 4.66 billion rupees initial public offering (IPO) due to volatile market conditions. In October 2013, two of its co-founders- Dhru Banthia and Manish Tuli were arrested by the CBI for allegedly bribing a government official in a shady real estate deal.
Micromax also faces a lot of flak for its poor after sales service and lack of service centres in most parts of the country. Unless these chinks in its armour are taken care of, Micromax faces the danger of fumbling on its roller coaster ride.
As of now, Micromax stands as a testimony to the fact that Indian entrepreneurs can make it big and give a tough fight to international players in hardware business too.