Next Big (Indian) Company

Their first phone, X1i, cost Rs 2,150 and was a big success in rural India. Today, they are the 3rd largest seller of mobile phones in India overall; and 2nd largest in the smartphone segment. Their revenue for the first 6 months of this year was Rs 3,100 crores and they hope to be a billion dollar company this year.

That company is Micromax, the Gurgaon based Indian company.

In a (mobile) world dominated by Samsung and Apple, what is Micromax’s strategy? They are OK “to buy technology that is one generation old”. Which isn’t as bad as it sounds, given that “a generation in the smartphone space is often measured in just a few months”, as Forbes puts it. Then they offer “‘good enough’ options for a fraction of the price charged by the ‘premium’ products.”

Good enough at low prices. That approach makes perfect sense in a country like India that is very price conscious. Add to that the fact that only 18% of Indians own a smartphone; and you have a huge number who will join in sooner rather than later. And guess what? Most of them will start with lower end smartphones. And that is exactly where Micromax is positioned.

Micromax’s international plans include similar kinds of countries. Already in Bangaladesh and Sri Lanka; next they aim for Myanmar, Russia, Romania and Ukraine.

It also doesn’t hurt that Google wants the Android OS and platform to run on lower-end phones to “reach the next billion people” (as Android head, Sundar Pichai said).

So what are their weaknesses? No R&D for one. The phones aren’t very reliable for another (that’s the tradeoff of the lower price). And they have few service centers and spare parts are hard to get.

But make no mistake, they are becoming big enough where they demand (and get) customization via joint development between its developers, manufacturing partners and microprocessor manufacturers. An American semiconductor giant is said to be offering it an India-specific LTE chipset. They are also very nimble: when Nokia launched its Asha series in India, Micromax launched its Bolt series in response within 2 months.

But Samsung says they don’t consider Micromax a threat. Rahul Sharma, one of the four co-founders of Micromax, is amused:
“I think Mahatma Gandhi said it best: ‘First they ignore you, then they ridicule you, then they fight you, and then you win’!”
Confident or just bombastic? Time will tell…

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