The story of Micromax Mobile is akin to the American dream. Who would have thought that the mobile manufacturing company that started small, launching budget phones for the low income market would grow into the 3rd largest mobile manufacturer in India and claim 12th rank globally? The company’s vision to address local needs, innovate under constraints, and deliver value for money has paid off by making it one of the strongest players in budget phones today, giving stiff competition to the likes of Nokia and Samsung.
After mobile handsets, Micromax has ventured into tablets, routers and LED televisions. However, mobile handsets remain the company’s primary product line. The company shipped 4 million handsets worldwide in the second quarter of 2011. It continues to sell over 1.5 million phones every month in most of the countries it operates in.
A Saga of Milestones
Though Micromax as a company came into existence in 1991, it took off at a tremendous pace only after 2008, when Rahul Sharma, co-partner in the company convinced his peers Rajesh Aggarwal, Sumeet Arora and Vikas Jain to move away from being a distributor of hardware and software solutions and jump on the mobile device bandwagon.
The company’s first product, a mobile phone called X1i was focused on addressing local needs that were not understood by larger players. In this case, the goal was to enable mobile connectivity in villages deprived of electricity to charge their handsets. The X1i had a battery backup of 1 month. The phone sold like hot cakes, helping the company capture a 0.59% market share during the first half year of its existence.
The second killer idea was handsets with two GSM SIMs that could be active simultaneously. Micromax was also the first company to launch a phone that could switch between GSM and CDMA networks automatically using gravity sensors.
Micromax’s intense coverage of rural markets helped it establish a strong distribution system that it could leverage when it forayed into the urban market. Here again, Micromax addressed specific user needs – a QWERTY phone for social media enthusiasts that enabled chat, a stylish handset for the urban woman, and so forth.
Next step? Tablets of course, in partnership with Intel. In 2012, the Gurgaon headquartered company captured 18.4% (CyberMedia’s Tablet Market Review for 2Q 2012) of the tablet market in India surpassing veteran players Samsung and Apple.
Research, Reinvent and Market
Micromax’s success can be attributed to its consistent vision and constant reinvention. The vision of the company is: one, address a need; two, aim for “affordable innovation,” and three, price products for mass consumption. The company often prices its products at almost 40% of competing devices.
Another fundamental reason behind Micromax’s success is its aggressive distribution and marketing strategy. Micromax handsets can be found with all retailers, in rural and urban locales. The company ensures shelves are always stocked. It has tie-ups with film celebrities and sponsor partnerships at key events like the IPL to spread brand awareness. Ads are positioned to match features of their low price devices with high-end brands.
Present and Future
Micromax employs over 1400 people today worldwide. It has 23 domestic offices across the country and international offices in Hong Kong, USA and Dubai. On March 31, 2013, the company logged in a record ₹3,168 crore in sales revenues for the financial year 2012-13. And it managed to kick off the fiscal year by raking in ₹50 crore plus on April 1 alone.
The company’s principal leverage in keeping prices down has been its manufacturing partnership with China and a self-owned R&D center that builds prototypes for specific consumer needs. However, with labour costs increasing by 70% from 2005 to 2010, China is becoming unviable. To counter the impact, Micromax is building manufacturing infrastructure in India.
The company has adopted a new strategy that’s working well – get some products manufactured in China and other countries, source components from abroad and manufacture some of the newer lines in India. Through all of that, Micromax continues innovating with motion-sensor phones, 3D handsets and other cutting-edge technology.
What Micromax has triggered in the mobile device market is similar to what Deccan Airlines did for the Indian airline industry. It brought coveted quality to masses at an affordable price. The success of Micromax proves that affordable pricing can become a winning strategy if it addresses an identifiable need, adapts to changing markets, and is supported by aggressive marketing and distribution channels.
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