How soon will Micromax become the next Samsung? A start-up story

Read about a growing start up company, Micromax, squaring off with tech giant, Samsung.

Micromax: Local business gives Sony a run for their money

Micromax started off as an IT company in 2000. Headquartered in Gurgaon, it was initially meant to develop embedded platform. By 2008, it started rebranding Chinese handsets and competed with international brands. It was only in 2010 that the company entered the mobile handset business, providing for the low-cost segment and there has been no looking back. The first handset to be launched from the Micromax production unit was called the X1. The handset was focused on providing a longer battery life for users in the rural market. Gradual growth in the market saw the company surpass quarterly sales of Samsung in 2014. In fact, on the 24th of January, the Indian startup became the first company to start selling in Russia.

How Micromax penetrated the market?

Indians are buying 12 million average mobile phones per month creating a huge INR 35,000 crore market annually. This explosive growth in the mobile handset market has seen many companies try to make their mark in the continent. However, it was Micromax, who launched its first handset only a couple of years ago become the largest local manufacturer. The latest 2014 IDC reports show that Samsung had a 17% market share while Micromax gained up to grab an overwhelming 14% share. Given the current growth rate, it’s only some time that Micromax is going to overtake Samsung completely. The only advantage Micromax had and it capitalized upon was catering to the cheaper market segment. While Samsung had been busy fighting off other big players like Apple, Nokia and Sony; Micromax was concentrating on the lower end market with innovative and effective products.

What was the strategy?

Micromax has always been focused on the simple strategy of delivering value at the right and more importantly, affordable price. It did the same by ensuring it had enough opportunities in the hyper-competitive market by basing all its products on innovative off-the-shelf technologies. This made its handsets cheaper than proprietary ones. Further, the brand didn’t ignore the other important P’s of marketing and was able to reach out to more than 560 districts across the nation through 130,000 retail outlets. Micromax also spent a lot on advertising and pushing itself as an affordable alternative for the average mass.

Another advantage with Micromax handsets was the Android operating system. It had also won worthy investors like Sandstone Capital LLC, Sequoia Capital and Madison India Capital. The total contribution by these three was already $43 million (200 crore in Indian currency). According to Rahul Sharma, the co-founder of the company, the complete idea about Micromax is tailored around innovation and simplicity. Today Micromax sells dual-SIM phones, #D smartphones, 3G android smartphones, tablets, televisions and data cards.

What market reports say?

According to Gartner research, India is still a market for feature phones. Samsung, which basically caters with high end devices, seems to have lost market share to domestic companies manufacturing the sub INR 10,000 devices. The Q2 reports of IDC for 2014 state that India’s smart phone market saw a growth of 84%. Notable stats however is that the demand for feature phones is still at a high 71%. Given the growth of Micromax, it is safe to assume that the next couple of quarters could easily see Samsung figures going down and giving way to Micromax. We would have to wait and watch for the exact differences.

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