When Micromax roped in international celebrity Hugh Jackman to be the face of the brand, it was just an endorsement of the Indian handset maker?s presence in the immensely competitive mobile phone market in India. As per research firms International Data Corporation (IDC) and CyberMedia Research (CMR), Micromax is today the second-largest smartphone brand in India?next only to Korean major Samsung?in market share: 19.7% versus Samsung?s 33.9%, according to CMR?s third-quarter data for 2013; and 22.2% share versus Samsung?s 25.7% in the second quarter of fiscal 2013-14 as per IDC.
Micromax is followed by another domestic brand Karbonn in the CMR list with a 9.5% share (Q3 2013). While global giants Nokia and Sony have a 5% share each, Apple and other homegrown firms, such as Intex, Zen and Lava, make up for the rest.
The figures speak for themselves. From just being cheaper alternatives to their feature-rich Korean and Finnish counterparts till a few years ago, Indian smartphone companies have clinched a lion?s share of the country?s smartphone market, accounting for as much as 30%, as per CMR?s Q3 2013 data.
Micromax?s chief marketing officer Shubhodip Pal explains the brand?s surge, saying, ?We have consistently stayed ahead of the curve with an innovative product line-up, including the Canvas series of smartphones, which has been a game-changer in the Indian mobile ecosystem with record sales. Our innovative pricing also helped us achieve a reasonable degree of success.?
?We are currently the second-largest smartphone player in the country. We clocked an annual turnover of R3,168 crore during the last fiscal (2012-2013), over the R1,486-crore sales turnover we registered the previous fiscal (2011-2012),? says Pal of Micromax.
Pricing it right
For the price-conscious Indian buyers, it is the pricing of Indian handsets that is the main attraction. Take, for instance, Micromax?s Canvas Turbo A250 launched recently. It runs on the latest Android (Jelly Bean) platform and is powered by a 1.5 quad-core processor, comes with a 13-megapixel (MP) rear and 5 MP front camera, and sports a 5-inch full-HD display. At R19,999, and compared with a price of over R40,000 for, say, Samsung?s Galaxy S4 or Apple?s iPhone 5C, the deal is value for money.
Karbonn?s S5, A6, A90 and A51, too, are within a price range of R10,000. Lava recently launched its entry-level 3G Android smartphones for customers looking to upgrade to 3G technology and smartphones. Its premium range of phones comes for anything from R11,000 to R14,000.
Videocon recently launched its latest smartphone, the A55HD, which boasts an 8-MP rear camera, 3.2-MP front camera, an Android 4.2 operating system, Wi-Fi and dual-SIM, and is priced at R13,557.
Says Sudhir Kumar, product head, mobile, Intex Technologies, ?When someone goes to buy a phone in India, the first thing they look for is affordability. Then come features, followed by durability and reliability.
Our phones cost about half of those by global MNCs, but with the same features.?
Spice Mobiles? TM Ramakrishnan (CEO, devices) adds, ?Taking into account the varied demographics and the socio-economic categories of the country, we are placing our products in all price segments and catering to the needs of every consumer. From R900 to 18,000, we have products at each price point.?
The journey so far
What prompted this surge in demand is in itself an interesting story. Five years ago, Finnish giant Nokia?s leadership position in India and the world was almost untouchable. However, in FY 2010-11, despite retaining the top slot in the handset business with a revenue of R12,929 crore, it showed a growth of only 0.2% over R12,900 crore it registered in FY 2009-10. Nokia was followed by Samsung, but with an impressive 22% rise in revenue, to R5,720 crore, than the previous year.
The rise of the Indian mobile industry started in 2009, when about 27 new handset vendors entered the Indian market. India?s mobile handset market touched 100.9 million units in the year ended June 2009, recording a growth of 6.7% from 94.6 million units in the previous year ended June 2008, as per the India Quarterly Mobile Handsets Tracker. Now, the Indian mobile handset market has grown 10.9% year-on-year (July-September 2013 over July-September 2012) on the back of increasing sale of smartphones, as per CMR data.
Micromax started its journey when the likes of Nokia ruled the Indian mobile market for almost a decade and Samsung was aggressively expanding its product base. At that time, Micromax catered to tier-II and tier-III markets with its modest price offerings. ?While everyone would want to build a strong footprint in India, we feel it will always be about companies that can customise and consistently reinvent their offerings to match the changing needs of the Indian consumer,? says Pal of Micromax.
Micromax finds its genesis in Baharampur in West Bengal. ?In 2007, I saw an Airtel payphone being powered by a truck battery. Every night, the PCO owner would lug the battery for 12 km to an adjoining village on his cycle, charge it there overnight and bring it back to the village in the morning,? recalls Rahul Sharma, co-founder, Micromax.
?I was fascinated by the nature of the innovative adaptation, which the payphone operator had employed to suit the difficult conditions, and my interest only grew when I found out that the operator was also able to earn a tidy sum of money in the process,? Sharma adds.
Based on that experience, Micromax soon launched its first phone, X1i, which had a battery back-up of one month. It was a huge success and was followed by its dual-SIM phone, which emerged a bigger hit and established the company as a serious player. As sales started booming, people began to take note of Micromax. Today, it has smartphones ranging from R6,000 (Canvas Viva) to over R19,000 (Canvas 4 or Canvas Turbo).
For Kumar of Intex Technologies, they came into the mobile handset business for a couple of reasons. ?First, we saw a long-term opportunity in the business, as telecom is going to have a big impact on lives in India. Secondly, being an IT company, we realised that the mobile handset industry is a dynamic one,? says Kumar.
Jarold Pereira, CEO, Videocon, feels venturing into the handset market was like completing the circle of what the electronic goods manufacturer has been into for decades. ?Mobile handsets were just another step towards providing people with quality products at affordable prices,? he says.
Launched in 2010, Celkon Mobiles, too, wanted to bridge the demand and supply gap of mobiles in India. ?The emergence of Chinese mobiles without warranty and service back-up also was a point of concern for us,? says Y Guru, chairman and managing director, Celkon Mobiles. The company is likely to achieve sales of a million handsets per month in volumes by the end of this year. ?Financially, the company has grown exponentially in the past three years with turnovers of R78 crore in FY 2010-11, R348 crore in FY 2011-12 and R636 crore in FY 2012-13,? says Guru.
Smart technologies
The rise of Google?s free Android operating software was easily the biggest factor that aided the rise of Indian handset makers. In the pre-Android era, phones were compared and bought on the basis of their hardware and software features. But Android almost completely took software differentiation to a new level, with a R10,000 Indian smartphone and a R45,000 smartphone of a renowned brand carrying nearly the same features.
?The emergence of smartphones has drastically changed the concept of mobile phones. Earlier, Videocon?s feature phones were priced at about R2,700, but today we can get an entry-level smartphone for the same price. So why won?t people go for a smartphone?? asks Pereira of Videocon.
Ramakrishnan of Spice Mobiles feels that by 2015, over 80% of handsets in mature markets will be smartphones.
Riding on the tide, for the first time, sales of feature phones fell by 0.8% to 51.8 million units in July-September 2013, and sales of smartphones rose by 152.3% to 11.1 million units, as per the latest CMR report (Q3 2013).
Some companies like Lava are making the smartphone market more lucrative by offering even cheaper varieties priced as low as R4,000. Says Hari Om Rai, chairman and managing director, Lava International, ?Currently, smartphones contribute almost 50% of Lava?s sales (including Xolo) by revenue and 21% by volume.?
Karbonn?s executive director Shashin Devsare says, ?The mobile market in the country has changed dramatically since the emergence of smartphones. As India becomes one of the biggest mobile markets in the world, smartphones have been one of the most significant aspects of growth.? The company expects a turnover of R4,000-4,500 crore by the end of FY 2013-14, which would be an increase from its revenues of R2,400 crore last fiscal. Its sales have increased from three million units in FY 2009-10 to 20 million units in FY 2012-13.
In the battle for superior technology, companies are also coming out with new products. Intex Mobile is planning to launch its first ?Octa-core? processor phone. In a strategic tie-up with MediaTek, Intex is touted to become the first Indian mobile company to offer the Octa-core chipset to Indian consumers. Octa-core essentially means eight processing cores built in together, allowing users to run multiple applications at the same time, without the phone coming to a standstill or being heated up.
?Be it the feature through which one can unlock the phone with just a blow on the Canvas 4 or the all-new ?Camerrazzi? on the Canvas Turbo, a lot of our focus has shifted to creating a better and seamless software experience for users, giving them something unique each time,? says Pal of Micromax.
Devsare of Karbonn says, ?Karbonn is working on dual-technology platforms and looking to engineer a device that will be able to provide dual 2G/3G/4G. We are also in the process of creating a full-HD smartphone range, which will be in continuation of the success of our HD smartphone product range. Also, processors with clocking speeds of 1.5 to 2GHz are in the pipeline.?
Zen Mobiles, on the other hand, is focusing hard on the design and colour aspect of their phones, as the company believes these are some things that an Indian customer looks for. ?We are doing a lot of study on the colour codes in our phones,? says Deepesh Gupta, managing director, Zen Mobiles. Zen Mobiles has a pan-India presence, with over 20,000 outlets. It claims to sell about three lakh handsets a month and is among the top 10 Indian handset makers. Their highest-selling smartphone is Zen Ultrafone 303, priced at R4,499.
In step with the best
When it comes to competition, Micromax believes that no Indian player can match its standards. ?We don?t believe that other players are going to affect us,? says Pal of Micromax, adding that every other major player in India has had to remodel their strategy to compete with them, ?but we have still continued to grow much faster than everyone else?.
Celkon thinks otherwise. ?Micromax, Karbonn and Lava are our domestic competitors, while Nokia and Samsung are our global competitors,? says Guru. To counter these mobile handset makers, they have already come up with some interesting features in their phones, besides competitive pricing.
?We had recently launched the music series smartphones ?Celkon Rahmanishq? in line with the Celkon Rahmanishq live shows, a tour that was undertaken by music maestro AR Rahman across cities in India. The models AR 40, AR 45 and AR 50 are priced between R5,999 and R8,999. We are planning to come up with around 20 models in both multimedia phones and smartphones in the coming quarter,? adds Guru.
Videocon believes that being in the electronic consumer goods market for over 27 years gives them an edge over other players. ?We are not competing with Indian manufacturers; rather our competitors are LG, Samsung, etc,? says Pereira. He says the company will launch vigorous campaigns in the mobile handset business in 2014.
The way forward
Micromax is now planning to start assembling phones locally by early next year, marking a shift in its current strategy of importing devices from China.
The company has a plant in Rudrapur, Uttarakhand, that employs around 400 people, where it has already started assembling phones.
Reportedly, the company is aiming to start domestic manufacturing at a substantial scale by the first quarter of FY 2015.
Apart from India, Micromax is also the second-largest handset maker in Bangladesh and the third-largest in Sri Lanka, besides having a strong presence in Nepal. Now, the company is looking to explore the European market too.
As per a company spokesperson, Russia will be first, followed by other places in Europe.
?Today, we are proud of being the first Indian hardware brand, which is set to go global. For Micromax, it will always be about standing at the forefront of innovation to democratise technology for the masses by offering seamless experience through a combination of great hardware and enhanced software capabilities,? says Pal of Micromax. The company?s co-founder Sharma adds the target is to touch a $1-billion turnover by the next financial year.
