(Recalling a dated piece on the request of a few readers who follow my India Infoline thought pieces)
Sudhir Raikar, IIFL | Mumbai | January 06, 201509:32 IST
Having marked its debut as a fringe player in a seller’s market dominated by the big fish, Micromax is today an undeniable force to reckon with, that too in a demanding and daunting smartphone bazaar of multiple choices. The news of the proposed IPO of this top-rung player represents a success story of several fertile breakthroughs rolled into one mobile phenomenon.
When analysts and media experts get busy scripting your evolution as they see it, you know you have arrived. Micromax knows that pretty well. Till date, many success factors have been attributed to the Micromax success story – some have seen it as a joyride on the wheels of a smart China-made arbitrage, others point out the company’s knack of reading the Indian customer’s mind and there are many who single out the company’s penchant for pocket-friendly innovation.
Indeed, all these elements have fuelled the company’s meteoric rise in the mobile space but the real engine of its success has been its insatiable appetite for calculated risk. After all, the market was open to other domestic players like Micromax with the same set of opportunities and possibilities beckoning them. It’s only the ingredient of risk, almost synonymous with innovation, which makes the Micromax evolution truly stand out - gutsy and gusty in the same breath.
Talk of smartphones, tablets, LED TVs or data cards, not many makers can match the Micromax acumen when it comes to fixing value and price exactly in line with the customer’s aspiration. Not many founders would have the time, inclination or the motivation to personally visit retail stores to gauge ‘live’ customer feedback. Not many strategists would be as keen to make the everyday needs of customers central to their R & D plans. Not many spenders would risk the gamble of big ticket celebrity endorsements to lure target markets, a move that could well have boomeranged with disastrous financial consequences.
No wonder, the likes of Sequoia Capital and Sandstone Capital chose to back the then non-entity proposition with their minority stakes. No wonder, Micromax made quick inroads into the rustic Indian marketspace with a rooted,matter-of-fact proposition like the 30-day battery backup. No wonder, Micromax was the first player to introduce dual SIM phones leaving the Nokias and the Samsungs with a trail, easy to emulate in design but impossible to match in price. No wonder, the company launched novel factory-packaged products with unfailing regularity and also distributed them with commensurate alacrity across the length and breadth of the country.
It would be interesting to see how the public issue, following a shelved attempt to tap the capital markets in 2011, shapes the company’s blueprinted cause for the future. As per media bytes, half of the proceeds are likely to fund a handset manufacturing plant in south India, while the rest would be used for global acquisitions and brand promotion.
Clearly, the road ahead would result in a bumpy ride. Consumers, given the sheer abundance of choice, have today become fussier about features and edgy about their post purchase ‘holding’ periods. China is no longer an arbitrage haven that it used to be what with news of steadily rising wages that would necessarily dilute the cost-effective manufacturing advantage. Competing brands like Xiaomi, Gioni and Motorola are likely to get more aggressive in their counter-strategies that could make a dent into the Micromax prospects. Besides, there’re a host of domestic players luring budget-conscious buyers with equally attractive price tags.
Given its exceptionally striking voyage till date, it’s highly unlikely that Micromax would be caught napping. Already, it is employing an assorted approach to the supply-side dynamic – using China as a selective manufacturing base on one end and running indigenous production lines on the other. And the chi of unquenchable innovation is still intact.
A strong case in point is the new online initiative Yu Televentures that seeks to tap the tech-hungry youth brigade,banking on the customization and performance value proposition of Android’s Cyanogen OS, confronting the Chinese OnePlus in the process. The latter is pinning its hopes on the Android Lollipop OS after a bitter last minute divorce with Cyanogen consequent to the Micromax-Cyanogen marriage. That Yu Televentures doesn’t mention the Micromax brand either on the product docket or literature could well be the company’s ploy to get rid of the ‘mass market’ tag that is often deemed sub-standard, more by its competitors than buyers.