Micromax: From Dominance to Decline and the Road to Revival?

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When I was a kid, there was an advertisement I used to like a lot, an advert where a set of prisoners were lined up and shot at by jailers. The twist in the ad was that none of the prisoners died, instead of blood there were splashes of color for every bullet fired by the jailers. “Colors come to life” was the ad’s theme, and it was for a company called Micromax.

In the Early 1990s, IBM introduced the first smartphone, the IBM Simon. Smartphone technology picked pace soon after, and other tech firms started developing. Blackberry created the revolutionary idea of having a qwerty keypad, emailing facilities, messaging, and calling in one device.  The late 2000s saw many brands come up with their different variants, notable among these, was the disruptive iPhone from Apple. Amidst this wave of innovation, an Indian brand, Micromax, emerged as a notable contender. Interestingly enough though, Micromax Informatics did not begin its journey in the smartphone sector. So, how did this brand make its way to the forefront of the mobile industry? Let’s find out.

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The beginnings

Micromax Informatics, an Indian electronics company, was founded in 2000 by Rahul Sharma, Rajesh Agarwal, Vikas Jain, and Sumeet Arora. Initially, the company specialized in low-end technology products and software solutions. Headquartered in Gurugram, Haryana, Micromax was led by Rahul Sharma, who had completed his education in Canada. In its early years, the company focused on providing embedded software solutions, with Nokia as one of its key clients. But what led Micromax to transition into the highly competitive smartphone market?

The turning point came when Rahul Sharma visited rural Bihar and witnessed the struggles caused by inconsistent electricity. This experience sparked the idea of designing phones with extended battery life, tailored for consumers in areas with unreliable power supply. This insight laid the foundation for Micromax's first mobile products. The company initially focused on creating feature phones that emphasized durability and long-lasting batteries, effectively addressing the unique challenges faced by Indian consumers.

By 2008, Micromax expanded into mobile handset manufacturing, carving a niche for itself with innovative features like dual SIM functionality and competitive pricing. These features resonated strongly with India's price-sensitive market, making Micromax a popular choice among consumers seeking value-driven mobile devices.

In 2012, Micromax made its foray into the Android ecosystem with the launch of its Canvas smartphone series. Combining high performance with competitive pricing, the series quickly struck a chord with Indian consumers, solidifying the brand's position in the market. Micromax further strengthened its presence through a robust retail network across India, leveraging its deep understanding of local consumer needs to stay ahead of the competition.

Micromax emerged as one of India’s largest mobile handset brands, second only to global giants like Nokia. Its success was fueled by its localized solutions, such as extended battery life, which appealed to both rural and urban users. By 2012, the company seemed unstoppable, riding high on its popularity and market share. However, the question loomed: how would Micromax sustain its momentum in an increasingly competitive market?

The growth Phase

Micromax experienced a remarkable run of success from 2012 to around 2018, thanks largely to the introduction of its Canvas series of smartphones. These devices effectively targeted key market segments, giving the brand a significant advantage in India’s price-sensitive and hypercompetitive market. The Canvas range combined affordability with premium features, catering to the evolving needs of consumers.

Let’s delve into the success factors behind the Canvas series and other key elements that contributed to Micromax's rise as a dominant player in the mobile handset market.

1. Canvas Series Success:

   In 2012, Micromax entered the smartphone market with its Canvas series, offering large displays, dual-SIM capabilities, and strong performance at affordable prices. The Canvas HD (A116), launched in 2013 at ₹13,999, was a game-changer, with a 5-inch HD screen and quad-core processor, selling over 900,000 units in three months.

   The Canvas Knight A350 marked Micromax's international debut in Russia in 2014. Later that year, the Canvas A1 with Android One OS was launched. With successful models like Canvas Silver 5 and Win W092, Micromax also partnered with Microsoft in 2015 as the official hardware partner for Windows Phone 8.1, enhancing its credibility.

2. Market Leadership in India

   By 2014, Micromax surpassed Samsung to become India’s largest smartphone brand, capturing 22% of the market share. This success was fueled by its deep understanding of Indian consumers, offering budget-friendly smartphones with features like long battery life and Android OS.

   Micromax also gained global recognition, ranking as the 10th largest smartphone vendor worldwide. By 2015, the company solidified its position as a global player with record sales and strong revenues, actively seeking investments from Alibaba and SoftBank to support its expansion

3. International Expansion and Diversification

   Micromax ventured beyond India into markets like Bangladesh, Nepal, Sri Lanka, Russia, and parts of the Middle East. By forming strong partnerships with local distributors, the brand effectively expanded its reach and grew its international market share, solidifying its presence in these regions.

4. Product Diversification

   Micromax expanded its product portfolio beyond smartphones, introducing LED TVs, tablets, and air conditioners, positioning itself as a comprehensive consumer electronics brand. In 2014, it launched YU Televentures, a sub-brand aimed at tech-savvy youth, offering smartphones powered by CyanogenMod OS—a highly customizable Android-based operating system.

As a result of all the factors mentioned above, in 2014-15, Micromax achieved impressive financial milestones, reporting revenues of INR 10,451 crores and profits of INR 364 crores. However, cracks in its foundation began to emerge, hinting at challenges ahead. One such early warning sign was a legal battle in March 2013. This marked the beginning of a series of hurdles that would eventually disrupt Micromax's remarkable run. What exactly happened, and how did it contribute to the brand's decline

The Onset of Challenges

Everything wasn’t smooth sailing for Micromax. Customers grew increasingly dissatisfied with the company’s after-sales service, while fierce competition from international players began to mount. These disruptions gradually eroded the company's stronghold in the market. By FY 2018-19, Micromax's revenue plummeted to INR 2,443 crores, a steep drop from INR 10,451 crores in FY 2014-15, with profits declining from INR 364 crores to just INR 145 crores. Let’s delve into the challenges that contributed to this downturn. First and foremost,

1. The Legal Battle of 2013:

   In March 2013, Micromax faced a major legal challenge when Ericsson filed a lawsuit in the Delhi High Court, accusing the company of infringing on eight of its patents related to 2G and 3G technologies—patents deemed essential for implementing these standards. The court directed Micromax to pay royalties to Ericsson, calculated as a percentage of the net selling price of its devices incorporating the disputed technologies.

Simultaneously, Micromax filed a counter-complaint with the Competition Commission of India (CCI), accusing Ericsson of abusing its dominant market position by charging exorbitant royalties for its Standard Essential Patents (SEPs), a practice Micromax argued violated the Competition Act of 2002.

This legal battle highlighted two key aspects

• Micromax's Growing Influence – It had become a significant player, drawing the attention and challenges of established global giants like Ericsson.

• Strategic Oversights – The lawsuit exposed gaps in Micromax’s strategy, such as failing to anticipate or prepare for the complexities of patent litigations in a competitive industry.

2. The legal conflict of 2014: In late 2014, Micromax faced another legal challenge when the Delhi High Court temporarily banned the sale of OnePlus One smartphones in India. The conflict arose from Cyanogen OS licensing issues: Cyanogen had an exclusive agreement with Micromax to provide its operating system for the YU Televentures brand exclusively in India, while OnePlus held a global licensing deal to use the same OS.

   The court's initial ruling, which appeared to favor Micromax, was criticized for potentially limiting competition in the Indian market. However, the ban was short-lived. Upon review, the Delhi High Court lifted the restriction, concluding that Cyanogen’s agreements with OnePlus and Micromax applied to different contexts. This allowed OnePlus One to resume its sales in India.

3. Challenges from Chinese Competitors

The entry of OnePlus was just the beginning of a broader challenge Micromax would face. Starting in 2016, Micromax began losing significant market share to Chinese smartphone brands like Xiaomi, Vivo, and Oppo. These brands disrupted the market by offering better hardware and specifications at comparable or even lower prices.

Additionally, they excelled in areas where Micromax struggled—such as superior after-sales service and highly effective localized marketing strategies. These factors allowed Chinese brands to quickly capture the attention of Indian consumers, further eroding Micromax’s once-dominant position.

4. Technological Lag

Micromax's slow adaptation to technological changes significantly contributed to its decline. The shift from 3G to 4G smartphones was a major turning point. When Reliance Jio launched affordable 4G services in 2016, demand for 4G-capable smartphones skyrocketed. However, Micromax continued to rely on outdated 3G technology, causing it to lose relevance in the rapidly evolving market.

5. Internal Challenges

Micromax faced significant internal challenges that hindered its growth. A major issue was its limited investment in R&D, which left the company struggling to innovate and keep pace with industry advancements. Moreover, its dependence on third-party manufacturers for production further slowed its ability to create unique products or optimize manufacturing processes.

On top of these challenges, internal conflicts and management issues led to the resignation of key personnel. These departures contributed to operational inefficiencies, affecting everything from product development to marketing execution. The combination of these internal struggles, alongside external competition, contributed to Micromax’s decline in market share.

The Rebuild? Is Micromax coming back?

Despite its decline, Micromax has been working towards a comeback by leveraging patriotism and government incentives. In 2020, the company relaunched with the "IN" series, targeting the budget smartphone segment and capitalizing on the "Atma Nirbhar Bharat" initiative. With the Indian Government’s Production-Linked Incentive (PLI) scheme, Micromax has reduced production costs and positioned itself as a local alternative to Chinese brands. The company has also expanded into consumer durables, maintaining relevance in the market.

Micromax co-founder Rahul Sharma is diversifying further into AI hardware, content, and telecom. The company is in a joint venture with Bhagwati to manufacture mobile phones, IT hardware, and automotive parts, which involves a partnership with one of the top ODMs (Original Design Manufacturers), Huaqin. This JV allows Bhagwati to have majority ownership and operational control, while Huaqin provides the technology and design capabilities. Huaqin is a major player in mobile phones, IT hardware, and automotive manufacturing, with a strong global presence. Additionally, Micromax is exploring custom-made memory and storage solutions for AI data centers in collaboration with a leading Taiwanese chip maker. Sharma is also working on a content app that bundles multiple OTT platforms under one roof, providing a single subscription for users to access a variety of content, aiming to disrupt the streaming industry.

Conclusion

Micromax’s rise was a testament to the brand's ability to tap into the needs of the Indian market, offering affordable yet feature-rich smartphones that resonated with consumers. However, the rapid pace of technological advancement, increased competition from Chinese brands, and internal operational challenges eventually led to its downfall. Despite these setbacks, Micromax is showing signs of resurgence, with a focus on nationalism and leveraging government incentives to lower production costs. By diversifying its portfolio and entering new sectors such as AI hardware and content, Micromax is positioning itself to stay relevant in a fiercely competitive landscape. Its future will depend on sustained innovation, strategic partnerships, and the ability to adapt to the fast-evolving tech ecosystem

About the Writer: Janakiraman S is a passionate business enthusiast with a knack for storytelling. Hailing from Chennai, he completed his schooling at The School KFI and earned his undergraduate degree from SRM Institute of Science and Technology. Currently pursuing an MBA in International Business at T. A. Pai Management Institute (TAPMI), Janakiraman is focused on broadening his horizons and setting ambitious goals for the future.

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