A year ago, Micromax vaulted past Samsung Electronics Co Ltd to become India’s leading smartphone brand. Today, its market share has nearly halved, several top executives have resigned, and the company is looking for growth outside India.
In Micromax’s slide to second place is a tale of the promise and peril of India’s booming but hyper-competitive smartphone industry.
India is the world’s fastest-growing smartphone market. Shipments of smartphones jumped 29 percent to 103 million units last year.
Rapid growth has helped nurture a crop of local brands, led by Micromax, that outsourced production to Chinese manufacturers. Now, as Samsung rolls out more affordable phones, the same Chinese factories are entering the Indian market with their own brands, depressing prices and forcing Indian mobile makers to rethink their strategies.
“What the Indian brands did to the global brands two years ago, Chinese phone makers are doing the same to Indian brands now, and over the next year we see tremendous competition for Micromax and other Indian smartphone makers,” said Tarun Pathak, analyst at Counterpoint Research in New Delhi.
Micromax, which was founded in New Delhi by four partners in 2000 but only began selling mobile phones in 2008, built its market share by working with Chinese manufacturers such as Coolpad, Gionee and Oppo to offer affordable phones quickly. In 2015, it launched more than 40 new models.
Meanwhile, Chinese handset makers, including Coolpad and Oppo, to which Micromax outsources its manufacturing, were sharpening their focus on India. Samsung, too, began to introduce more affordable models there.
In 2015, Chinese brands doubled their market share to 18 per cent, according to Counterpoint Research, taking away business from Indian budget phone makers such as Micromax, Intex, Lava and Karbonn. Indian brands’ market share fell from 48 to 43 per cent last year.
Chinese phone makers including LeEco, Xiaomi and Lenovo have also partnered with e-commerce companies including Amazon India and Flipkart to sell phones directly to consumers, saving on distribution and sales and reaching new online shoppers directly.
In the final quarter of 2015, Micromax’s shipments fell by 12.1 per cent, against growth of 15.4 per cent for the sector, according to industry tracker IDC. Micromax’s share of the smartphone market fell to 13 per cent in the fourth quarter from 22 per cent at its peak in 2014, according to IDC.
Micromax, which is privately held and does not disclose financial information, maintains it is profitable. Founders Jain, Rahul Sharma, Rajesh Agarwal and Sumeet Arora still control about 80 per cent of the company. They have raised nearly $90 million from investors in the last five years.
Facing competition from both Samsung and inexpensive Chinese phones, Micromax plans to increase production in India. Jain said that the company plans to double local manufacturing output from 1.5 million units to about 3 million units a month over the next six to 12 months.
Already a top-10 brand in Russia, Micromax is seeking a partner to help it expand further outside India and diversify into televisions and tablets.