Micromax: The Action-Packed Story of an Indian Company

20 Nov 2020  Read 301 Views

The Indian market of digital products and services began booming in the mid-2000s, almost bringing about a revolution. After almost ten glorifying years, these budding Indian businesses all of a sudden started vanishing as they were either getting acquired by bigger players or were getting out-marketed by their cash loaded Chinese rivals. Micromax was one such Indian gem that thrived during the booming period but soon became a part of history as the headwinds overtook.

The fact that Micromax was an enormous name in the hypercompetitive mobile industry (especially in 2013-15) may come as an astonishment to many of you as the name is not very well known these days. Surprisingly, this is the same company, which, a few years ago, was giving cut-throat competition to Samsung. This Indian mobile company disappeared into the technological tide of 4G-5G, and the rest of it was eaten up by its Chinese competitors like Oppo, Vivo, and Xiaomi.

However, with 2020 nearing its end, Micromax has probably found its way back into the Indian mobile industry. Micromax has announced its "comeback" with its new series of budget smartphones, the 'In' series. Capitalizing smartly on the ongoing anti-China sentiment, Micromax has launched this series under the 'Make in India', 'Vocal for Local' and the 'Aatmanirbhar Bharat' campaign.

So, as Micromax vies for a thumping comeback into the market, we go down the memory lane to investigate the factors that prompted its rise in the Indian mobile industry, and also analyze its downfall. 

The Rise of Micromax: India's bright star 

A lot of us would recall Micromax from its fame during the 2010s as a cell phone producer. When Micromax was established in 1991 by Rajesh Agarwal, it was never a telephone organization. It began as a distributor of PC equipment for various brands like Dell, HP, and Sony. 

The organization was later called Micromax Informatics. Rahul Sharma, one of the most conspicuous figures in Micromax, had just joined the organization alongside Sumeet Arora and Vikas Jain as equivalent partners in 1999. Micromax in the mid-2000s was, to a great extent, a software organization known as Micromax Softwares. 

Rahul Sharma was introduced to the idea of fixed wireless terminals by one of his Finnish associates.

During the 2000s, landlines were essential for communication. The technology which was introduced to Rahul Sharma utilized sim cards which would have revolutionized the sector. The idea that an entire business could be set up where a lot of people paid and utilized one single sim card to make calls was very much acknowledged. 

The primary advantage of this idea was that the rural areas were still away from no landline connectivity. Hence, this innovation was amazing as it could even be utilized in troublesome landscapes.

Sharma wasted no time, and soon, Micromax started making special phones that resembled landline but used sim cards for Nokia. Micromax was additionally designated as the All India wholesaler for Nokia 32s. These phones resembled landlines but used sim cards instead of wired connections. The phones became a major hit, and soon, Micromax was installing around 10,000 Nokia 32s per year, during that time.

Shockingly for Micromax, Nokia auctioned off its business around the world. Micromax still was able to milk benefits from this idea as they, at that point, took this equivalent innovation to Airtel. They were entrusted with setting up Payphones in Jammu and Kashmir. Micromax was then permitted via Airtel to extend to the remainder of India. In 2007, during their peak, they were setting up 250,000 devices. 

At this point, the founders of Micromax had just got the flavour of uncertainty, evolving technology, and the fact that the organization had to evolve. The organization, at that point, chose to alter its course towards cell phones.

Entrance into the Smartphones segment  

The founders of Micromax were searching for the next big thing and fortunately discovered the idea. Rahul Sharma was going through Bengal when he saw that locals were fueling telephones utilizing the battery from a truck.

This charmed Rahul Sharma and on examining, the driver of the truck told him that he made his living that way. The driver said that he charged the battery in another town overnight, taking it back to help power the telephone, the following morning. 

Sharma theme realized the power issues that India had been facing. He saw a chance and saw how progressive a low-budget telephone with a long battery life could be in India. Sharma took this plan to other founders at Micromax, who were sceptical of the idea's success. This was because the market was then dominated by giants like Nokia, Samsung, Motorola, and LG. Sharma figured out how to persuade the founders, and they decided to enter the market. 

Micromax chose to make a new phone whose battery could go on for 30 days. The assembly of the phone would happen in China by OEM's (Original Equipment Manufacturer). These OEMs would deliver hardware as wanted, which would then be sent into India and later advertised and sold by Micromax.

Micromax depended on these OEM's and started working with Chinese organizations like Oppo, Vivo, Gionee, and Coolpad to produce its phones in China. By doing this, Micromax dispatched its first cell phone, Micromax X1i. They chose to target rural zones as these were the areas which were the most affected by power cuts. 

Unfortunately, Micromax couldn't find new distributors as they were new players in a market which had companies like Nokia. To fix this, Micromax went to their current terminal distributors who took a great deal of persuading but eventually agreed. Their attempts, at last, proved to be fruitful as the organization sold the entirety of their 10,000 phones in just 10 days, with the market demanding for more. Within a few months, Micromax had turned itself from a 10 crore/annum business into a 100 crore/annum business.

By 2015, Micromax had reached great heights, becoming the second-largest smartphone company in India, after Samsung. It also began expanding itself to international markets, with even becoming one of the top 10 smartphone brands in Russia.

What happened to Micromax?

Unfortunately by 2019, Micromax saw an eventual downfall, with its valuation having fallen by 90% from its 2015 Peak. Now let us look at the factors that pushed Micromax out of the market.

Entrance of Jio

The hyper-competitive cell phone industry presents fast developments in a limited period, and this is the greatest challenge an organization in the industry faces. Brands in the Indian market discredited the speed with which the conversion from 3G to 4G would happen. Airtel had just started investing in 4G innovation. 

Any organization needing to adapt would study past patterns and build up its course of events accordingly. Buyers had taken a very long time to change from 2G to 3G, and in 2015, individuals were all the while utilizing 2G networks. 

But, it was the arrival of Jio that suddenly changed the business. At the point when Jio was dispatched, each Indian went from having no internet or paying heavy expenses for 2G/3G networks into having the quickest internet network, 4G free for several months. 

Furthermore, calls were free as Jio utilized VOIP with the assistance of 4G. Sadly, not every person had phones that could get to 4G. Technology is such that you can't run 4G information on a phone that is intended for 3G. Any individual searching for another phone or attempting to utilize the offer would purchase a phone that could work with a 4G network. 

Tragically, Micromax had 40 phones in the market, none of which upheld 4G. Their business practice included using the revenue from the phones they sold, to arrange and obtain another batch of phones from China. 

Overnight Micromax wound up with a huge stock of 3G phones that nobody needed. The company, at any rate, could not attempt to provide phones with 4G network support by assembling subsidies, just to remain in the game. 

Eventually, Micromax didn't produce their phones nor did they have the independence from the rat race to dump their existing 3G phones in the market and assemble 4G mobiles overnight. By the end of the year, their overall industry share had diminished to just 9%.

Chinese competition

The mobiles that were marked as Micromax were actually produced by Chinese organizations. These organizations incorporated any semblance of Oppo, Gionee, Vivo, and Xiaomi. Chinese organizations had grown to understand the capability of the tremendous client base in the Indian business sectors. 

These organizations started analyzing the Indian market, trying to find entry passages. The presentation of Jio constrained set up 3G phones to pull out its stock, which permitted Chinese producers to flood the industry with 4G-ready phones. This made an ideal setting for Chinese devices, as they already had an arrangement of gadgets that were viable with 4G. 

At first, Micromax had the option to hold off well against these organizations as it was, at that point, an established Indian brand. Yet, soon the 'Make-in India' campaign turned out, and organizations like Oppo, Gionee, Xiaomi, and Vivo started gathering in India. This hit Micromax hard. 

Micromax was set up as a brand that sold budget-friendly phones yet lamentably; these were redistributed from China. The Chinese organizations were specialists in both equipment and programming, whatever was as of now offered, they excessively did with the better quality and at less expensive rates. The focal point of Micromax, then again, was quantity over quality. The phones offered by Micromax were average. 

These Chinese brands were likewise sponsored by a prevalent monetary force. This permitted them to offer disconnected retailers motivations to advance their products. They additionally exploited the developing E-business presence by banding together with them. 

Each city was besieged with hoardings of green and blue finishing the Chinese attack. By 2018, Chinese cell phones controlled 67% of Indian cell phones. Micromax's offer additionally tumbled from 9% to 3.4%.

Lack of Innovation and Development 

Micromax always focused on quantity over quality, and as a technology company, the primary focus should always be on the development of products so that the customers can avail the most advanced technology available in the market. In order to do this, more investment in research and development is needed, rather than just focusing on production and marketing.

The Chinese companies were experts in both hardware and software. They focused on providing a high-quality product with all the latest features at an affordable price. These companies focused on innovation and product development, along with marketing and produced superior products.

On the other hand, most of the Micromax phones were of average quality. They also compromised on memory space and performance in order to maintain a low price. Once people realized that there were other options too, which offered them a better product at the same price, they switched over to those. Resulting in Micromax losing out big on market share.

Final words

Even though Micromax doesn't share the spotlight any longer, it is arranging a rebound in India with the dispatch of 'In' telephones. However, it is quite obvious that recovering and re-launching in a market presently overwhelmed by cheap, Chinese items will be no simple assignment.

Trying to tap back into a market severely dominated by cheap, and technologically advanced smartphones is a very brave move by Micromax, which had merely become a brand which sold 'cheap phones.' Hence, trying to tackle this poor brand image will also be a major challenge.

However, with the anti-China sentiment flowing through the nation, Micromax has a good opportunity to drive out its competitors and re-establish itself in the market. As strong as the sentiment is, the phones will be a success only if they prove their quality and standards against their very strong competitors.

So, will Micromax be able to stand up to the promises it is making and will it be able to snatch back its market share? We will have to wait and see.

About the Author: Ishita Jha | 21 Post(s)

Ishita Jha is an MBA Finance student of BIMTECH, now a blogger; trying to survive the pandemic recruitments. She can be found researching, exercising, and binging to balance life. She finds her happy place in writing.

Liked What You Just Read? Share this Post:

Finology Blog / Business / Micromax: The Action-Packed Story of an Indian Company

Wanna Share your Views on this? Comment here: