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Micromax Facing Headwind!

... Harkirishna Mude

Jus a Year ago, Micromax appeared to be winning the battle of the Indian smartphone market as it vaulted past Samsung to become India’s largest selling smartphone brand(in terms of volume). From that day to today,things have chnaged substantially for the brand as its sales have slided and its market share nearly halved. According to reuters, the company has lost key top executives and is struggling to find new demands and markets for its phones, even looking at other countries .

According to experts,the very factors which worked for Micromax during its haydays are now becoming the reasons for the decline of its fortunes.Micromax led the bunch of home grown brands that outsourced production to Chinese manufacturers. The same Chinese factories are entering the Indian market with their own brands, depressing prices and forcing Indian mobile makers to rethink their strategies.What the Indian brands did to the global brands two years ago, Chinese phone makers are doing the same to Indian brands now. Micromax worked with Chinese companies like Coolpad, Gionee and Oppo who have made direct entries into India. Chinese phone makers including LeEco, Xiaomi and Lenovo have also partnered with e-commerce companies including Amazon India and Flipkart to sell phones directly to consumers, saving on distribution and sales and reaching new online shoppers directly

Even top names like Samsung is rolling out more affordable phones.

In 2015, Chinese brands doubled their market share to 18 percent. Micromax’s share of the smartphone market fell to 13 percent in the fourth quarter from 22 percent at its peak in 2014.

On top of this Micromax has been plagued by management issues between the founders and the senior managment team and raising additional rounds of funding have proved difficult for the company. Reportedly, Alibaba walked away from a mooted $1.2 billion purchase of a 20 percent stake, citing a lack of clarity on growth plans. After Alibaba walked away, Micromax has struggled to attract other investors which has affected Micromax’s plan to invest in software R&D and hardware design. The company was forced to scale down the in-house R&D project.

To wriggle out of the situatio, Micromax is planing  to double production in India to about 3 million units a month over the next six to 12 months. Company is aggressively looking at other markets and is already among the top-10 brand in Russia, Micromax is seeking a partner to help it expand further outside India and diversify into televisions and tablets.

Source : Reuters, Venturebeat

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