Friday 15 / November / 2024
Bangalore: Micromax Informatics has become the latest Asian smartphone company to broadcast its global ambitions. The Indian company known for cut-rate phones and a frenetic pace of new-model launches is evaluating an entry into several overseas markets including China, en route to becoming a top-five player internationally.
While India’s smartphone market remains relatively under-penetrated, Micromax co-founder Vikas Jain said prices were "headed south” because of an influx of foreign competition. But it’s sticking to its plan of becoming one of the world’s five biggest sellers — a goal that would entail a presence in major markets like China.
Smartphone sales are sputtering even as Asia’s largest brands, from Huawei Technologies to Xiaomi, narrow the gap with Apple and Samsung Electronics Just this week, Huawei said it hoped to unseat the dominant players within five years. Micromax, No. 3 in Russia currently, has considered markets like Indonesia and even the United States in the past but hasn’t made that much headway beyond India.
"We do keep evaluating about two to three international markets. Not to say we’re definitely going to launch in any of the three,” Jain, one of Micromax’s four founders, told Bloomberg Television. "If we have a vision of being in the top five, we can’t be ignoring the China market.”
"Sooner or later, we should see a presence in the China market.”
Street-corner brawl
Replicating the expansive distribution network it employs in India will be a challenge.
Micromax, which sells about three million devices a month and is ranked just 10th in sales worldwide, shot to prominence by selling cheap phones from the shopping malls of India’s biggest cities to the street corners of its smallest towns. But the company recently weathered the departure of several top managers, including Chief Executive Officer Vineet Taneja, as intensifying competition squeezed margins.
Phone makers — including Apple — are increasingly focusing on India with markets like the US and China plateauing. Micromax already trails Samsung and is now trying to fend off Chinese players from Xiaomi to Huawei and Oppo. Those companies are trotting out inexpensive models aimed at the very segments Micromax targets. While still number two in India, the Indian company’s shipments fell more than 20 per cent in 2015 while Lenovo’s, for instance, climbed almost 60 per cent, according to researcher Canalys.
Still, Jain stresses the market’s "phenomenal” potential. Smartphone sales had room to double from current levels, even if that free-for-all is depressing prices, he said. Micromax’s approach has been to flood the zone with phones, giving consumers "multiple options” to switch from other brands: in April, it introduced 15 models in a single day. Last year, it began selling an $11 phone in a pouch — just like the shampoo and toothpaste satchels that India’s middle-class buy and discard.
"The industry should be selling more than 500 million mobile phones, and we still sell only 250 million,” he said. "The life-cycle has shrunk to less than 15 months now.”
Longer term, Micromax — backed by influential US venture firm Sequoia Capital — is trying to build software services to enhance the appeal of its hardware. It will continue to localise production, moving beyond mere assembly while working on what it hopes will be its next big devices. The country is pushing phone makers to move manufacturing operations from China, to align with its "Make in India” programme.
"There are a few projects that the team is working on that we really feel should be the differentiator,” Jain said, refusing to be drawn on details. "I’m sure that it will really make a change in the way mobile phones are looked at and used.”
