A CASE STUDY REPORT

ON
“Micromax:A Lesson In Pitfalls Of The Indian
Smartphone Industry”

SUBMITTED IN THE PARTIAL FULFILLMENT OF

THE PGDM DEGREE COURSE OF
BALAJI INSTITUTE OF TELECOM & MANAGEMENT (BITM)

SUBMITTED BY

SHASHANK SAXENA
TM1615154

2016-2018

BALAJI INSTITUTE OF TELECOM & MANAGEMENT

S. No. 55/2-7, TATHAWADE, NEAR WAKAD,
OFF. MUMBAI-BANGALORE BYPASS
PUNE (411033)

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 Declaration

I, Shashank Saxena, student of BITM – Balaji Institute of Telecom and

Management, Pune, Hereby declare that this case study paper entitled
“Micromax:A Lesson In Pitfalls Of The Indian Smartphone Industry” is a
bona fide record of work done by me. I also declare that it has not previously
formed the basis for the award to me for any degree/diploma associate ship,
fellowship or other similar title, of any Institute/Society.

Place: Pune

Date: 28th Feb 2018

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 Table of Contents

S. No. Particulars Page No.

01 Executive Summary 4
02 Introduction 5
03 Organization History 5
04 Products 6
05 Main Contents 7-10
06 Analysis 11-12
07 Learning Objectives &Case Solution 13-16
08 References 17

Executive Summary

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This case study talks about Micromax, which one time gained the second spot in
the Indian smartphone market after Samsung and now has seen a drastic fall in
its market share as well as sales. The case has a mention about the complete
scenario of the company right from its growth to downfall. The case contains
detailed analysis of the reasons which helped Micromax progress and the
reasons which led to its downfall.

The case contains the reasons, variables and scenarios which led to growth in
the share of Micromax and also the same which led to decrease in its market
share. This case presents the situations in which Micromax which once became
the market challenger has now lost its shares to emerging organizations such as
Oppo and Vivo. The case analyses Micromax its value chain reasons which
contributed to its decreased growth and what Micromax could have done to
prevent its market position.

In short the case describes how Micromax grew in the Indian market and how it
has now become a side player in the smartphone industry.

Introduction

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Micromax Company :
Micromax is an Indian Consumer Electronics company headquartered in
Gurgaon, Haryana. The company was established as an IT Software company
operating in the Embedded Devices Domain; it later entered the Mobile Handset
business. By 2010, it was one of the largest domestic companies making
handsets in the low-cost feature phone segment in India. As of Q3 2014,
Micromax is the Tenth Largest Smartphone vendor in the world. The company
is facing stiff competition from Chinese companies that have entered the Indian
market. The company also owns YU Televentures, which sells its products
under the brand name YU.

History :
Micromax was incorporated as Micromax Informatics Ltd. on 29 March 2000.It
started selling mobile telephones in 2008, focusing on low pricing to compete
with international brands. Micromax's co-founder Rahul Sharma once saw a
public call office being powered by a truck battery because of frequent power
cuts in its locale. It prompted him to launch a feature mobile phone with an
extensive battery life.[better source needed] Micromax launched X1i, its first
telephone with a month-long battery back-up. In 2014, Micromax's sales
exceeded those of Samsung to become the mobile telephone manufacturer
shipping the most telephones in one quarter in India. On 24 January 2014,
Micromax became the first Indian mobile company to start sales in Russia. As
on 10 April 2016, Micromax announced a strategic partnership with digital
payments company TranServ and global payments technology major Visa to
offer the next generation of payments solutions in India.

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Products:
In 2010, Micromax entered the tablet computer market with the Funbook series
Micromax launched its first eight-core flagship smartphone, Canvas Knight
A350, in January 2014 in Russia. In the same year, Micromax launched the
Android One smartphone, Canvas A1. In November 2014, Micromax partnered
with Cyanogen Inc. to provide Cyanogen-based smartphones in India, under the
brand name YU.On 17 June 2015, Micromax launched Micromax Canvas Sliver
5, which it claimed was the slimmest telephone in the world. While most of
Micromax's smartphones run the Android OS, the company also markets
smartphones that operate Microsoft's Windows Phone 8.1. The company is an
official Windows Phone 8.1 hardware partner; it launched two Windows Phone
handsets, the Micromax Canvas Win W092 and the Micromax Canvas Win
W121, in June 2014.On 8 June 2015, Micromax announced the launch of
Micromax Amaze 2. The device has a 5-inch IPS display with resolution of
1280 x 720 pixels. The smartphone is powered by a 1.4 GHz quad core
Snapdragon processor with 2 GB of RAM and 16 GB of internal storage.On 27
June 2016, Micromax announced the launch of Micromax Canvas Unite 4 and
Canvas Unite 4 Pro. Both these smartphones run on Indus OS 2.0. The Canvas
Unite 4 is powered by a 1.0 GHz quad-core processor which is coupled with 1
GB RAM. Coming to the Micromax Canvas Unite 4 Pro, it has a 1.3 GHz quad-
core processor under the hood which is paired with 2 GB RAM.In 2016, it
launched Micromax Canvas Mega 2, with 6 inch screen in budget segment of
6,500 with 4G.

Main Content
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One of the most interesting things that have followed in the wake of the post-
Nokia era of phones in India has been a massive change in public opinion about
budget phone manufacturers. And at the helm of this sea change in mentality
had been a certain Indian smartphone manufacturer, Micromax, whose budget
smartphone offerings took them from just another Chinese rebrand to the
number 1 smartphone maker in India early in Q4 2014. Ironically, it’s the
budget smartphone segment that in recent months have turned away from their
once favoured champion, and the ‘Micromax- the Indian smartphone
manufacturer‘ 

In the last one year, Micromax has seen its shares come tumbling down from a
healthy 22% in Q4 2014 as the market leader, to 14.1% in Q4 2015. The
cause behind it? A myriad of reasons all of which played their part in varying
measures to bring one of India’s biggest smartphone manufacturers down to a
grating halt. Today we take a look at these factors, from the internal struggles of
the company to the emergence of new Chinese OEMs into the Indian market
and try to pinpoint exactly where Micromax went astray. Come along with us as
we investigate the zenith and nadir of Micromax and find out if the best bet for
this homegrown company lies on foreign shores.

A Heady Rise That Spoke of Imminent Fall

Before we begin analysing the current dire situation that Micromax finds itself
in, let us first take a brief look at the company’s ascent to the top of the Indian
smartphone industry. India has always been a budget conscious market, and as
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we have highlighted many times in the past, the $100-$200 price point is the
sweet spot for Indian consumers.

Way back in 2012, when the average price of smartphones in the Asia-Pacific

hovered around $262, Micromax launched the Canvas 2 A110- the first dual-
core smartphone to ever grace the Indian smartphone market in the ultra-budget
category. With a price point of $150, the Canvas 2 was the game changer that
shot Micromax from the bowels of obscurity into the limelight of the Indian
smartphone arena. Carrying on the torch came the next iteration of the Canvas
lineup the Micromax Canvas HD, an affordable quad-core handset.

At that time, the average ASP of Indian smartphones hovered around

$200, and one of the main causes of the sharp drop in pricing was due to the
proliferation of smartphones by homegrown companies like Intex, Xolo,
Karbonn, Lava and of course, Micromax. In Q4 2014, Micromax reached its
peak with 22% of market share. Second-placed Samsung was finding it hard to
keep up with them as the Micromax imported Chinese handsets and consistently
undercut Samsung in the pricing department.

Yet, little did Micromax know, that their impressive sales record had turned
quite a few heads in China and the OEMs, that Micromax had till now imported
phones from, had begun hatching plans of infiltrating the Indian smartphone
market.

A Failing Business Strategy in a Changing Landscape

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Fast forward to the present day and the Indian smartphone market has evolved
at a rapid pace. 95 million smartphones have been shipped in 2015 alone to the
country, a massive hike up of 32% from the 41 million in 2013! Yet if we look
at Micromax’s shipments for 2015, we will see that they dropped 12.1 % YoY
and 23.5% from Q3 2015. Alarming signs indeed. Clubbing that with the rapid
loss of market share of 8% points YoY and we see how bad of a pickle
Micromax finds itself in.

But why does Micromax who seemed to once have the industry leader Samsung
at gunpoint, now seem to be staring down the barrel? One of the deciding
factors has been the entrance of companies like Xiaomi, Oppo, Huawei and
Lenovo. For the Indian smartphone market, the INR 6,000-8,000 price bracket
is the sweet spot with 22% of the market share coming from there alone. And
that is a price segment where entrants like the Lenovo A6000 and A6000 Plus,
Redmi 2 and Redmi 2 Prime have dominated for the past couple of quarters
notching up sales numbers north of a million.

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India, especially in Tier 1 and Tier 2 cities has become increasingly familiar
with e-commerce sites. In fact, online sales contributed 37.3% to total sales in
Q4 2015 growing at a brisk pace of 2.5x from the previous year. Half of this
was due to the online-only sales model that was followed by the new Chinese
players in the market. Micromax had preempted this and tried to beat Xiaomi
and others at their own game by launching a sister brand Yu.

However, internal struggles that plagued Micromax has been responsible for
Yu’s faltering steps as well. In the past year, the Chinese OEMs have increased
their total market share in India from 15% to 22%, and in our next segment, we
will look at a few of the controversial decisions adopted by Micromax that may
have let the Chinese OEMs wedge their foot in the door to the Indian
smartphone Industry.

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ANALYSIS

SWOT Analysis of Micromax:

Strengths
• Economical Handset provider
• Local market knowledge.
• Word Of mouth 
• Celebrity endorsement
• Extensive distribution
• First Mover Advantage

Weaknesses

• Limited global presence

• Not preferred by Tech-Savvy people
• rice means low quality .

Opportunities

• Market Expansion: 
• Penetrating the Urban market
• Improving the brand perception.

Threats
• Competition from national & global players: 
• Dynamictech environment: 
• Replication of business model: 
.

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Value Chain Analysis

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Learning Objective:

1 - How did Micromax achieved good position in Indian Market?

2 – What were the main consequences behind decline of Micromax?

3 – What could have Micromax done to prevent its value in Indian Market?

Solution 1:

Growth Reasons
• It targets budget shoppers
India is a market where nothing sells better than the low price. Consumers,
especially those who are buying their first smartphone after ditching the feature
phone they were using for the last five years, are extremely price conscious.
Micromax understands this. Hence, it mostly sells smartphones in Rs 4,000 to
Rs 15,000 price brackets. This is the price segment where most of the
consumers are and by giving people phones they can afford, Micromax reaps
big rewards.

• It releases as many phones as it can

In the world of smartphones, to keep the buzz around your products either you
have to be Apple or you have to keep people interested in your phones by
showing them a new phone every month or even every week. Micromax
launches almost one to two phones every month, keeping the brand name fresh
in people's memories.

• Marketing with a difference

While Micromax may not have as much marketing budget as multinationals
have, it does a really good job of marketing itself. It spends ample money
traditional marketing and advertisement channels like television and
newspapers. It portrays the Micromax brand as a cool, hip brand that is different
from others. The tagline -- Nothing Like Anything – does work.

• Good reach inside India's small towns and rural areas

Micromax has very good reach within India. This means whether you are in a
big city like Delhi or in a small town outside Agra, you can easily find a
Micromax phone in the store. Now, Samsung too has invested a lot of money in
its supply chain, and just like Nokia of the old days it is omnipresent in the
Indian phone market. But when you combine the fact that Micromax phones are

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easily available with the low prices at which they are available, you get a
winning combination. In comparison, Samsung still comes across as sort of a
premium brand, which is more expensive.

Solution 2:
Decline Reasons
Last year Micromax was beating Samsung Electronics in India in terms of
selling smartphones, but now its market is reduced half of that size. I remember
the market was flooded with affordable but high on specs smartphones. The
same specs that you could get in an expensive Samsung phone, at a bit lower
quality, and lower prices, you could get in a Micromax smartphone. According
to the above-linked report, not just the company’s market share has nearly
halved, its top executives are leaving the company in hordes and the company is
trying to sell its hardware in other countries. What lessons can you learn, as a
technology company, from the Micromax decline?

There could be many reasons – many reasons we don’t know of, but as a
general observer, I would say as long as you can provide something that the
others can easily provide, you are going to operate on shaky ground. In the
beginning Micromax smartphones, and to an extent even tablets, were a novelty.
There were these smartphones that looked sleek, ran advanced versions of
Android and to an extent even durable. Suddenly you would see many people,
even those who would otherwise have never purchased a smartphone of such
specs (and didn’t even have use for them for that matter) were seen using
seemingly high end phones.
The report says that it is the lack of vision that is hastening Micromax’s decline
as a leading smartphone brand. They were planning to have an in-house R&D
department which didn’t work out because investors like Alibaba.com pulled
out. Initially you can grow as a cheap smartphone company by sourcing
components from Chinese manufacturers but if you want to compete in the big
league of Samsung, LG and Apple, you need to make a unique offering and that
you can only do by having your own development team.
Another problem with Micromax is that now Samsung is also flooding the
market with cheap phones and as per the Indian mentality, people would rather
buy a product from a known, international company than from a local company
provided the international brand is cheaper or just slightly expensive.

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It’s not just Samsung that is out-lower-costing Micromax; after Micromax there
have been many companies like Xiaomi and OnePlus that are not just providing
better -looking smartphones, but also carry out aggressive promotional
campaigns, partnering with various online retailers. You don’t see such
marketing from Micromax.
Another lesson that can be learned from Micromax is that when it comes to
selling things at a lower price, there is no limit to how low your various
competitors can go. For example, the very same companies from which
Micromax sources smartphone components are selling smartphones in India
now. If they can directly sell their smartphones and other gadgets, why would
they do it through Micromax?
Micromax, half-heartedly, also launched an expensive range of smartphones but
since it has already made a reputation of a manufacturer of cheap phones,
people wouldn’t like to trust the company for in higher-end phone. As a brand
Micromax is already known for a company that sells cheap phones. So if you
are spending money on an expensive phone wouldn’t you like to spend the
money on a company that sells expensive phones rather than a company that
sells cheap phones?

Solution 3:
Strategies Micromax could have adopted
Sponsoring Indian Cricket Matches
One of the major sponsor who used to sponsor every cricket match held in
India, our own “Hero Honda – Desh ki Dharkan – Dhak Dhak”. But Micromax
knew that Indian people love cricket more than any other game and serial. So
they took the title from Hero Honda and did sponsor a lot of series. With this
strategy they reached to millions of customers. In 2014-15 they paid 20m INR
to BCCI per match.
Reach to Indian market
Soon after launching their own mobile handsets in the market they started
opening outlets all across Indian cities. They opened outlets and service centers
more aggressively than any other mobile company even beating Nokia. Through
this they become a household name in all cities and quickly made its own
identity.

Right product strategy

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Micromax knows what Indian wants. Sasta and Tikau. Who understands this
line more than Indian and this is what Micromax does. Right product at right
time at right price. Of course their product’s quality is lesser than that of Nokia
and Samsung but the product lives of all companies are same. Who keeps a
mobile handset more than one or two years. Every quarter they bring a new
handset, only competitor in terms of launching handset is Samsung. They have
product for all categories and for all type. Now they have started selling product
in Russia as well.

Dosti with Android

I think this is the major factor which helped Micromax to be big and Nokia to
lose. Micromax didn’t invest lot of money in R&D just like Samsung and
Nokia. They were fully dependent of Open source Android. They do
customization and launch it in the market. As Android has almost 60% of entire
smartphone market share their mobile handset was a obvious choice for middle
class family.

Introduction of Celebrity
Really? Do you think Huge Jackman and Twinkel Khanna helped Micromax to
increase their sales. Tell me your thoughts first. I think absolutely not. During
our thesis one of my batch-mates was working on Celebrity and its impact of
brand image. I don’t think he/she took example of Micromax but Micromax
hardly took help of any celebrity. They brought Huge Jackman but it was a flop
concept. He came on TV ads for just few months and vanished. So I don’t think
Micromax is thinking about another celebrity in current scenario. If you can
remember AB sir came in Zen Mobile ad, Farhan Akhatar is brand ambassador
of Intex mobile and Hritik Roshan is of OPPO. Did these brand succeed in the
market? Hardly no. So I don’t think introduction of celebrity was a major factor
in making Micromax big and gaining market share.

What next?
I think Micromax should open manufacturing plants in India as well. They
should support Modi’s cause “Make in India”. In their phones if systems hangs
and reboots, it starts showing Chinese which I think an embarrassment for an
Indian company. They should take care of their display, processor, camera and
audio quality because now these are the factors which make difference. Apart
from that rather than launching 7-8 handsets in a year they can concentrate on
few handsets. Apple launches only 2 handsets in a year and still a big hit.
Quality matters boss.

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References :

https://en.wikipedia.org/wiki/Micromax_Informatics
https://dazeinfo.com/2016/03/18/micromax-growth-smartphone-industry-india/
https://www.reuters.com/article/us-micromax-management/indias-micromax-
once-a-rising-star-struggles-idUSKCN0WF00M

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