On august 29, 2012, as jk shin, president of samsung Electronics, unveiled Galaxy Note 2, the second iteration of his company’s flagship ‘phablet’ smartphone series, in Berlin, a guerrilla shipment of 10,000 similar devices was selling big in stores across India. It had been brought in only a week ago.
Well, the devices were almost similar.
The Canvas A100 smartphones had 5-inch screens as against the 5.5-inch ones on the Note 2 but the resolution was not half as detailed; the batteries were two-thirds the capacity; the processors had just one core compared to the four on the Note 2; and RAM was just a fourth in comparison.
Then there was the price: Rs 9,999 compared to the Note 2’s Rs 39,900 at the time of its formal launch in India in November that year.
At 25 percent of the Note 2’s cost, the devices seemed to make sense to the Indian customer—so much so that in another three weeks, they would be all but sold out. This was the signal its makers, the Gurgaon-headquartered Micromax, had been hoping and waiting for.
Within days its supply chain, distribution and marketing machinery started shifting into attack mode. Specifications were mapped and orders sent out to China for a newer version featuring a dual-core processor, a better quality and higher resolution screen, more internal memory and an upgraded camera. The improved Canvas 2 was unveiled in the first week of November, a little over two months after its predecessor’s 10,000-unit test launch had proved successful: It still sported the Rs 9,999 price tag.
The phone turned out to be a winner for Micromax, selling out across many stores within days and commanding a premium over its retail price for nearly six months. Supply constraints certainly contributed to the instant sales (Micromax underestimated the popularity of the devices) but there was no doubt that the company was on to something significant.
“Our multinational competitors offered one or two smartphone models in every successive screen size—3.5 inch, 4.3 inch, 4.7 inch, 5 inch, etc. It was as though they were checking each [screen size] box with a few models,” says Rahul Sharma, 37, one of the four co-founders of the company and easily its most recognisable and dapper face.
So what did Sharma and Micromax do over the next year?
“From a Rs 6,000 Canvas Viva to a Rs 19,000 Canvas 4, we have put a 5-inch smartphone next to each of their boxes. We bet the house on 5-inch smartphones and that market just exploded!” he says.
Yesterday’s Scrappy Challenger Is All Grown Up
Micromax has come a distance since making its first mobile phones in 2008. According to research firms IDC and CyberMedia Research (CMR), the company is the third largest seller of mobile phones in India behind Samsung and Nokia.
The mobile phone market is currently going through a major upheaval as hundreds of millions of users in India and around the world upgrade from cheaper and less-capable feature phones to smartphones. In the smartphone race, both these research firms place Micromax firmly at the number two position behind Samsung in market share—22.7 percent versus Samsung’s 31.9 percent, according to CMR; and 22.2 percent versus 25.7 percent, according to IDC.
Samsung India declined to speak with Forbes India for this story. A spokesperson said the company did not believe the IDC and CMR figures were accurate; they were more convinced by the GfK-Nielsen numbers (a proprietary subscription service, the specifics of which Samsung did not disclose). “We do not consider Micromax a competitor,” the spokesperson added.
Sharma is amused when he hears that Samsung does not consider his company a competitor. “I think Mahatma Gandhi said it best: ‘First they ignore you, then they ridicule you, then they fight you, and then you win’!” he says.
And winning they are.
According to Sharma, Micromax has already surpassed last year’s revenue of Rs 3,100 crore in the first six months of this year. “We’re targeting one billion dollars by the end of 2013,” he says.
Vikas Jain, another co-founder, says, “In most countries where Samsung has a local subsidiary and has been in operation for over 12 months, they are usually number one. If we defeat them in India, this might become the first country where that stops being the rule.”
With its coffers filling up with revenues from the sale of over 2.5 million handsets each month, Micromax is setting its sights even higher. A stunning new global ad campaign featuring Australian actor Hugh Jackman was rolled out recently. The company claims it is spending Rs 30 crore on the campaign alone.
Gone is the diffidence and scrappiness of before. In its place is a belief that it can vault itself up the global pecking order of smartphones where the downslide of Nokia and RIM has left a vacuum. “Though it accounts for less than 10 percent of our revenue today, in three years we want our international revenue to be equal to our India revenue—or $2 billion each,” says Sharma. As with most Micromax senior executives, the line between confidence and bombast is blurred.
Educate, Empower, Elevate
Prof. Bholanath Dutta
Founder, Convener & President
MTC Global & Knowledge Cafe
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