Wednesday, April 23, 2014

Micromax Upsets the Indian Smartphone Market

Last week I wrote about how companies should formulate their 35-word strategy. However, I realized that I know about some great Blue Ocean Strategy success stories that I should share. One such story is the success of Micromax – a consumer Electronics Company based in India primarily known for its smart phone manufacturing. Micromax started as a software company in 2000 but started getting recognition only after they started their mobile phone manufacturing operation in 2007, and became the largest local producers in 2010.During their rudimentary stage in India, Micromax was fighting the big names: Nokia (The erstwhile largest player. Microsoft acquired the giant when they failed due to the lack of pace in their innovation), Samsung, LG, Sony Ericson and others. Micromax tasted success because they adopted strategies that are key to a company adopting the Blue Ocean strategy. Interestingly, as with the case of Blue Oceans, Micromax created a mobile market demand for them by catering to the local Indian tastes, needs, preferences and issues. They did not look far beyond the Red Ocean. They just restructured the boundaries of the existing Red Ocean. Micromax “created a new space, challenged the competition, expanded and catered to the demand and broke the barrier of value-cost trade-off”. Let me discuss their story, and tell how they made all this possible.

India has a mammoth demography spread across the rural and urban areas. One may find it hard to believe, but mobile communication is the chief factor that has redefined the way businesses are done in the last decade. Mobile communication has changed supply chains for the better, integrated the country and enhanced commerce between the rural and urban economy. Now, cell phone being a key element of business, every businessperson- in whatever scales possible- doctors to small vendors- needs it for the success of the business. However, the truth remains that the phone needs to be charged repeatedly. India has imminent power issues, and especially in rural areas. Micromax wanted to create demand by revolving their selling point that addresses the issue. They launched their first model named X1i, which claimed to have battery charging that lasted 30days.This triggered their network effect.

In India, there is hardly any concept of locked phones. Generally, users buy SIM cards and do have the option of selecting from various players who control the spectrum. Many customers use multiple SIMs simultaneously to enjoy the best tariffs provided by each service provider. Again, Mircomax differentiated with smart innovation that fit the local needs. They launched the first dual-SIM phone, which could support two active SIMs at the same time. Other global brands found it difficult to launch their dual-SIM versions very soon.

Post that success, where they made themselves visible amongst the bigger players, came the era of smart phones. Although only around 20% mobile phone users in India use smart phones, Indian market is 3rd largest Smartphone market after China and the US. Owing to the style, features and capabilities, with the changing trends everyone aspires to have Smartphones. However, not all could afford the price for a high-end Samsung model or an iPhone, which is nothing short of a status symbol in India. Micromax appealed the Indian emotion, and targeted the youth by launching a series of low-priced versions of Smartphones. And yes, all Smartphone are powered by Android OS. Android was easily the biggest factor for Micromax’s success.  Market leaders are using android too. Hence, it brought about standardization of mobile OS, and in-turn product differentiation became difficult. In this scenario, the Samsungs and the LGs were at a disadvantage because Mircomax launched a series of smart phones similar to their high-end models at a price a fifth as theirs. They are constantly doing that and have maintained the fast pace of innovation required to sustain in this industry.  They do so by saving on their R&D costs. They use components powered by cutting-edge technology, but just one-generation old- and again, in an industry where a generation lasts only a few months. They do not build components. They smartly customize it by using cheaper products. So far, this formula is working guns for them, at least in India. They have sold large volumes of Smartphones. In fact, now, few of their models have a waiting period. They are raking in the moolahs! They are a billion-dollar company.


Their present target is to unseat Samsung from the top position, which holds the highest market share. Micromax is also increasing its market to other countries like Nepal, Bangladesh, Sri Lanka and Russia. In addition, they are increasing the product line by entering into Tablets, LED TV and 3D Data card market. Though I cannot predict how the company is shaping up for its long-term prospects, I will certainly track what lies ahead for Micromax. 

References:
[1] http://forbesindia.com/article/boardroom/can-micromax-become-indias-leading-smartphone-maker/36577/0
[2] http://yourstory.com/2011/08/the-story-of-micromax-mobiles-meteoric-rise-by-co-founder-vikas-jain-techsparks-2011-grand-finale/

3 comments:

  1. this is so authentic article about Indian Smartphone Market. i am really glad to find much formation from Micromax Upsets. Micromax had most efficient brand in India and world wide too thanks for sharing this post.

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