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HowMicromaxcrackedthecodeInjustfouryears,themobile,tabletandnowTVplayerisgivingmultinationalsarunfortheirmoney

ShivaniShinde|MumbaiOctober10,2012LastUpdatedat00:00IST

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NaxalcouplesurrenderBatteriesofmobilejammerremovedfromHazaribaghjailSriLanka'slegalfraternitytoreturntoworktomorrowProVidarbhaactiviststorevivedemandforseparatestateJNUscholararrestedformolestingDUstudent

ItleadsthetabletmarketinIndiaaheadofglobalgiantslikeSamsungandApple(accordingtoCyberMediaResearchfiguresreleasedonMonday)andisthethirdlargestmobileplayerintermsofvolumes.

Micromax,whichenteredthemobilespacejustfouryearsagoin2008,isdoingallthis,andmore:thecompanyonTuesdayforayedintothehomeentertainmentspacewithLEDtelevisionsandhometheatresystems.

AndcofounderRahulSharmasaysitsquitepossiblethatMicromaxwilldoaSamsungandstormtheglobalmarketswithitsproducts.Asabrand,wewanttobeabletotouchthelivesofconsumers.ThewholeconversionfrommobilephonestosmartphonetotabletsandtoTVwillhappensoonerthanlater.Andwewanttobepartofthatstory,saysSharma.

Withpresenceinninecountries,Sharmaatthemomentisfocusingonthedomesticmarketandwantstocapturealltheavailablescreensinthecountry.ThatmaynotbetootallaclaimastheIndiaQuarterlyMediaTabletMarketReviewforthesecondquarterofthisyearshowsMicromaxhas18.4percentofthetabletmarketinIndiaagainstSamsungs13.3percentandApples12.3percent.

Thecompanyhasalsobeeninchingupinthemobilesegment.Apartfrombeingthethirdlargestplayerwith8percentsharebehindNokiaandSamsung,itisalsothe12thlargestmanufacturer.TheGlobalHandsetVendorMarketsharereportfromStrategyAnalyticsstatedinthesecondquarterof2011(thelatestfiguresavailable),Micromaxtoppedthemicrovendorrankings,shippingfourmillionhandsetsworldwide.

Thenumbersareimpressiveforalateentrant.Infouryears,Micromaxhasmanagedtologinsalesofcloseto1.5millionhandsetspermonth.

SowhatisthekeytoMicromaxsuccess?Expertsattributeittolowpricing,uniquefeatures,focusonentrylevelproductsandahugedistributionsetup.Inthetabletspace,itsproductsstartatRs6,000andgouptoRs9,999.ThesameisevidentinitsLEDTVlaunch.AnentrylevelLEDTVof24fromMicromaxcostsRs15,990andafullHDsmartTVof55costsRs129,990.

ButSharmadownplaysthepricewarrioradjective.Pricingwasneverourdrivingforce.Whenwelaunchedourfirstmobilehandset,itcamewithabatterythatlastedfor30days.Inthetabletspace,wefocusedontheeducationandtheentertainmentsegment.Goingaheadyouwillseemoreproductsintablet.Thevolumesinthisspaceareonlyexpectedtogoup,Sharmasays.

Micromaxstrategywiththetabletrevolvesaroundeducationandentertainment(edutainment).TheFunbookhastieupforeducationrelateddigitalcontentfromPearson,EveronnandVriti.Forentertainment,itcomespreloadedwithBigflix(freemovieforamonth),Hungama,IndiagamesandZenga.MicromaxintroduceditsproductonlyinAprilthisyearandwithfiveproducts,ithassalesof65,00070,000permonth.

AsignificantaspectofMicromaxssuccessisitsdistributionnetwork.Thisissomethingthatthefoundersinheritedrightatthetimeofinception.Micromaxwasfoundedin1991byRajeshAggarwalwhowasadistributorforcomputerhardwareofbrandssuchasHP,DellandSony.Foreachcategoryofproducts,thedistributionchannelvaries.

Forfeaturephonesandtablets,thecompanyhasathreetierdistributionsetup,andforsmartphonesandLEDTVs,itsatwotiermodel.Thethreetiersetupincludes80largepartners,2,500smallpartners,followedbyanetworkof125,000smallretailoutletsspreadacrossthenation.

TelecomindustryexpertsalsobelievethatthecompanyhasmanagedtounderstandtheIndianconsumerpsychemuchbetterthanthemultinationals.EntryleveltabletistherealbattlegroundinIndia.Thereisahugeamountofactivityinthetabletspace,especiallysincethegovernmentinitiatedAakashtablets.Theusersareawarethatthesearenotsomefancygadgetsbutentryleveloffering.ThatiswhereMicromaxhasgainedmarketshare,saysVenuReddy,DirectorIDC.

Similarlyinthesmartphonesegment,thecompanyhastriedtoincludeapplicationsthatwillmakeitsproductsstandoutdespitethelowpricestamp.Forus,smartphoneisnotaboutplainvanillafeatures.Wewillnevercompromiseontheuserexperience,andyeswehavealsotriedtocontrolthepricepoints.Thattooisimportantifyouwantmoreandmoreusersforourproducts,saysSharma.

Thecompanydoeshavemanyfirststoitscreditwhenitcomestothemobilehandsetmarket.Forinstance,the30daybatterybackup,dualSIMphones,Quertykeypads,dualreceptionmodehandsets,universalremotecontrolmobilephonesetcthattooataverylowpricepoint.

Ifthissoundstoogoodtobetrue,listentoFaisalKawoosa,LeadAnalyst,CMRTelecomsPractice.Kawoosasaysthekeytokeepingthepricesdownisatightandefficientsupplychainmanagement,whichinvolvesvendorselectionandvolumeplay.Thekeyaspectsinmanagingcostinanyhandsetarethefeaturesthatavendorisoffering,thechoiceofvendorpartnerandthevolumeplay.Whilethereareseveraltechcomponentstoatabletandhandset,thekeyelementsincludememory,display,chipset,batteryandofcoursethebrandvalue.Soplayerswhoarecateringtothelowersegmentwillfocusontheseissues.IncaseofMicromax,thecompanyworkswithchipmakerssuchasMediatek,MStar(whichisnowmergedwithMeditek),andQualcomm.AlsoseveralplayerssuchasQualcommandSamsungbundlecomponentssuchascamera,sensors,memory,displaydriversandreferencedesignintothechipsets,whichbringdowntheprice.

InthesmartphonesegmentthatisconsideredtobeoneofthefastestgrowingsegmentinIndia,Micromaxhassalesof100,000to150,000amonth.ButthisisasegmentwhereitispittedagainststrongplayerslikeSamsung,NokiaandHTC.Likeseveralofitsglobalpeers,Micromaxtooistryingtoadduniqueapplications.AfterApplesSiri,avoicecontrolledpersonalassistant,MicromaxcameupwithAishawiththesamefeatures.LastmonthitalsolaunchedamobilemessagingapplicationHookUp.ItsunlikeanyofthemessagingservicesastheuserusingHookUPcanalsosendmessagestoapersonwhodoesnotusetheapplication,addsSharma.

ThebiggestdifferentiatorofMicromaxcomparedtootherdomesticorChineseplayersistheconnectithascreatedwithitsbrand.Amongthelocalplayers,itisthestrongestbrand.WhileNokiacontinuestoruleintheoverallmobilehandsetmarket,Micromaxhasemergedastrongdomesticplayer.ItwillbeinterestingtoseehowMicromaxbreaksthebarrierinthesmartphonesegment,saysAnshulGupta,principalresearchanalyst,Gartner.

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