Business

Micromax, the rise and the decline

Micromax logo

We discussed the Micromax Software’s entry in the phone industry in the previous chapter. The company was completely an outsider with zero credibility to start with. However, they had an idea, which was unique in its own way. If you are here without reading their journey from a software company to a phone company, you can read it here. Micromax made 10000 phones which could last for three days without charging and sold them within 10 days of launching.

This was a huge boost for the company as they had managed to enter the business which was going to spin the company’s fortunes to a whole new level. Micromax wouldn’t have reached the heights it did if it wasn’t for innovation and some thorough market study. Rahul Sharma, one of the four founders of the company, talked about ‘identifying gaps’ in the market as well.

The next play for this upcoming company was something that paved the way for how other companies looked at the Indian market. Micromax was the first company in India that introduced the dual sim feature in a phone. This idea came to Rahul Sharma when he was talking to his chef. The chef was apparently using three different sim cards for three different purposes.

Back in the day, there was a myth that only rich people could afford two sim cards. However, Micromax changed it overnight. The company introduced a phone which could accommodate two sim cards via one band which controlled the cost. This idea won Micromax a lot of hearts and accolades at the same time.

That said, this was not the only innovative idea that led them to success, it was an amalgamation of many such ideas and their idiosyncratic way of looking at the market. They soon launched Bluetooth enabled phones for the young generation. This was backed up with specially designed phones for girls which, by the way, caused a frenzy in the market.

Another such feature which was added with just a small tweak in the system was the call recorder. Rahul Sharma, to his credit, has gone out of his way in search of new ideas. This time he was at one of the shops selling phones to bridge the gap between manufacturers and the consumers. There he met a painter who was in need of the phone which recorded calls. This was because the customers of the painter were fooling him by paying less even after agreeing to a certain price over the phone. And there you go, another idea, another feature, and another win.

This was the way Micromax dealt with the market in their triumphant years. They did not simply follow the leading companies, they carved their own way to the top. Sharma believes that following the strategies of leading companies is a ‘honey trap’. One could only be left at the bottom if the company is not innovative and unique in its approach.

These ideas and their implementation shot the company to fame and was the second largest smartphone seller in 2015. It was only behind Samsung who not only dominated the Indian market but also the world as well. Cloud 9 was where the Micromax was but the bubble soon burst and brought them back to the harsh reality.

2008-2015 was the period when Micromax rose, flourished and was at its prime. They even entered the smartphone business in 2010-11 and their phones like Canvas and Canvas 2 were a huge hit amongst youngsters. The company, however, had outsourced its R&D and also its manufacturers were stationed in China. Companies like Coolpad, Gionee, and Oppo manufactured the phones for Micromax and this backfired for them.

It is believed that Micromax’s decline was because the Chinese smartphone makers entered the Indian market. But that is hardly the truth. Micromax’s fall was due to their own doing or let us just say it was because of some serious changes in the country. Micromax had 40 phones in the market, ranging from INR 5000 to 10000. All the phones were 2G and 3G phones, none of them had facilities to accommodate a 4G sim card.

Overnight, Reliance Jio announced free 4G sim cards to the entire country. Soon after, the honorable Prime Minister of India, Mr. Narendra Modi came up demonetization. Since none of the 40 types of phones in the market supported 4G and all the phones were priced aggressively where cash was the main transactional mean, Micromax sensed its doom.

This was the first blow. Then came the sucker punch which dethroned the company of its position. Oppo and Vivo, the green and the blue, entered the Indian market, not with 40 but only 2 phones. Wherever you walked, wherever you looked, hoardings in blue and green followed you. It was a complete invasion from the Chinese companies.

Micromax’s market share was 16.22% in 2015. It was just behind Samsung in that race. A 4G revolution later it was down to 2.74% in the first quarter of 2017. This was majorly due to Xiaomi, Oppo, Vivo, and other Chinese companies offering great features at an affordable price and more importantly were aware of the revolution.

The downfall is also down to a lot of exits and scandals taking place in the management of the company. CEOs left, a bribing scandal happened, decision makers were fired and this took place at a time when they needed the big minds on the board. However, Rahul Sharma now remains optimistic. Micromax with him remains motivated and promisingly, they are clawing their way back to the top.

Slumped to ninth position in the market, Micromax launched their phone Bharat 2 in the recent past. It sold over half a million phones within 50 days. It supported 4G and was priced at a mere INR 3499. This and many other electronic devices like TVs and sound systems were introduced to the market. The entry into a new market and launching phones at an aggressive price has helped them to be in profit. Although their founders don’t reveal the numbers, they do maintain that the company is in profit. That said, this was the journey of Micromax from a no one to someone to a fallen one. It will be very interesting and amazing to see how the Indian company rises again and gives us a story to write about it.

– Unmesh Phule

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