Xiaomi and Micromax: Local heroes come to the forefront

Written by Nandagopal Rajan | New Delhi | Updated: Aug 12 2014, 19:18pm hrs
MicromaxMicromax is now the largest mobile phone brand in India dethroning Samsung.
It has taken a long time coming, but an Indian brand is finally at the top of what would be the worlds second largest smartphone market. Micromax is now the largest mobile phone brand in India dethroning Samsung, according to Counterpoint Research. It also sells more feature phones than Nokia, which has held the top spot since the time these devices became popular in India.

But the ascend of Micromax has not come as a real surprise. It is already the tenth largest smartphone brand globally and that has come after years of toil as a brand that pushed affordable phones to a value conscious Indian customer. But in recent times this homegrown mobile phone giant has been closing in on Korean tech major Samsung in the Indian smartphone race. It has still not managed to become the top smartphone manufacturer in India, but it sold 17% of all mobile phones in India in Q2 2014, more than any other brand.

In the feature phone segment, it remains to be seen if Nokia can come back to the top, especially with overall growth being just 2% in India last year. Feature phones are slowly losing relevance as smartphones become increasingly cheap. You can get a smartphone, maybe not with the best of features, for as low as Rs 2,000. Not surprisingly, among the cheapest smartphones are many models from Micromax.

Samsung is still holding on to its perch as the top smartphone brand in India. However, Indian companies like Micromax, Lava and Karbonn as well as new Chinese entrants like Xiaomi and Gionee have been posing a tough challenge with the offer of more features at a lesser price. They are also resorting to innovative marketing strategies, primarily based on an exclusive online sales model. After Motorola scripted a successful e-tailing strategy, Xiaomi has been able to take to it to a next level. The online only strategy is particularly beneficial for companies like Xiaomi who dont have to bother about setting up expensive brand stores, but tough to emulate for a well-entrenched company like Samsung. Dont be surprised if more companies from around the world queue up to sell their phones through Indian e-tailing sites.

Faced with an onslaught of Android KitKat smartphones trying to push the price-to-feature ratio to new lows, Samsung has launched three new smartphones priced under R7,400. The company seems to have realised that in the changed scenario of the last few months it is this long tail of the smartphone segment that you need to be more relevant in. It is this tail that has made the Indian manufacturers the billion dollar companies that they are now, not top of the line flagships.

Samsung does not have to look far to learn. It has just lost its top spot in China to local startup Xiaomi. It is not about losing the smartphone throne in one country for a quarter. China is the largest smartphone market in the world accounting for 37% of global shipments at 108.5 million units according to research firm Canalys. Interestingly, Xiaomi is just four years old as a company. It grew 240% year on year to garner a 14% market share in China.

In many ways the story from across the Himalayas is very similar, a story of the local start up overthrowing the global major. The local story is even better for the Chinese where there are just two global players in the smartphone top 10. In India, Motorola, Nokia and Sony have made in the last few months by offering good phones are even better prices. Our top 10 has its fair share of Chinese entrants too.

While Micromax will gain confidence from Xiaomis performance in China, there is no doubt that this Chinese startup will be among the companies challenging its dominance in the so called affordable smartphone segment along with new entrants like Asus and Motorola. Micromax still has a lot of catching up to do to usurp Samsung in the smartphone segment. While we cannot doubt Samsungs ability to fight back for even a second, the new entrants will grow at the expense of the bigger players. That is why Micromax cannot afford to relax even for a minute. It also has to watch its back.