A Study on the Details and Reasons for Micromax's Failure in

India

By 1) Nisha Kishor Shendge, Student Pursuing MBA At ASM’s

Institute of Business Management and Research, Pune
2)Dr. Arun Pardhi, Prof. at ASM’s Institute of Business Management
and Research, Pune

Abstract:
Micromax was incorporated as a legal corporation as Micromax
Information Ltd. on March 29, 2000. They started selling mobile
phones in 2008 with low pricing as compared to other smartphone
brands like Samsung, iPhone, one plus, etc.

According to IDC [International Data Corporation], Micromax had a

22% market share in the Indian smartphone market at the time, while
Samsung had a 26% market share and Nokia and Sony were also
strong performers.

Micromax is an Indian company, but they were still dependent on

countries like China for many of the parts needed to build a phone.
when a dispute happened between China and India.

The Indian government and the Chinese government simultaneously

increased import and export taxes. The tax rate was increasing, and
that’s why Micromax was not likely to afford the imported parts from
China, as their motive was to sell their phones at lower and more
affordable prices.

Micromax and other Indian brands took too much time to decipher the
situation and made their decision too late, which has given an
opportunity to brands like Samsung, MI, Realme, Oppo, Vivo, and
other Chinese brands to make their roots stronger in the Indian
smartphone market.
Introduction:

The fact that Micromax was a big name in the Indian smartphone
industry but is now barely known by many because the name is no
longer recognized. Earlier, they were competing with big fish like
Samsung, etc. Their products include a phone with a 30-day battery
life, a dual-SIM mobile smartphone, and a multimedia cellular cell
phone, but they have yet to meet Indian expectations. After being the
second-biggest player among Indian mobile tech giants,

Following the launch of Jio 4G service, Micromax undoubtedly failed

to adopt the market trend, and that delay in launching a 4G phone in
the market caused Samsung to tumble its fortunes in the Indian
smartphone market, launching the Samsung J2, J5, and J7 as
midrange 4G devices that offered 4G connectivity as well as good
performance.

According to my observations, many buyers from rural areas shifted

to Samsung phones because they were less expensive and more
readily available in the offline market.

By adopting this market trend, oppo and vivo also came into the game
with massive advertising campaigns, and because of that, enormous
banners were placed on every mobile storefront.

This advertising campaign made oppo and Vivo market leaders at the
time.

After the turns, Realme and Xiaomi came into action and changed the
whole game. Here, Micromax was struggling to keep their roots
strong in such a volatile market.
 Literature Review:

i. What happened to Micromax? The rise and fall story! By

Aron Almeida
ii. A case study on Micromax
by Kiara Dutta
iii. Downfall of Micromax
by kshitij Gupta

iv. Micromax failed massively against tough competition by

Manoj
v. Micromax story – rise and fall of largest Indian smartphone
company by soha Habib
vi. The rise and fall of Micromax: are they coming back with in?
by Sandhya Bharadwaj
vii. India ditched Micromax for cheap Chinese phones, but now
loves its ‘Amenabar’ credentials
by shubhangi misra
viii. How Micromax created a niche for itself and became number
ix. Samsung and Micromax case study – 865 words
i. SM – 2 case study on Micromax mobile – Abhishek
satpathy, avijit hazra, laupyam, subhrajit.
x. What went wrong? Micromax riches to rags- the Micromax
story. – aswathi cherkkil
xi. Case study by Suraj Kumar ojha MICROMAX and its Downfall
xii. Micromax scaling the largest Indian mobile handset company
case solution by Adam Hudson
xiii. Micromax: from leader to loser, what went wrong? by vs. pai
xiv. Micromax: a library to calculate coherent light propagation in
heterogeneous materials by tom vettenburg
Objectives:

1) To find out various reasons why indigenous and native technology

companies are failing in our own market. Example: Lava, Micromax

2) To investigate into the factors that influenced Micromax's brand

image in India,

3) To suggest ideas that will benefit our indigenous smartphone

manufacturers

4) To discover Micromax’s errors for its failure.

5) To know, how other brands successfully created their brand image

in the presence of such a deeply rooted brand “Micromax”

Rise of Micromax:

There was a time in India, when Chinese smartphones and

feature phones were considered as low standard phones by Indians
and that time was dominated by Indian smartphone tycoon Micromax.

Every smartphone and feature phone manufactured by Micromax

dominated market and those phones were the top priority of Indians.
Micromax was started by Rajesh Agarwal, Vikas Jain, Rahul Sharma
and Sumeet Jain in early 2000s. In initial days, Micromax used to
build hardware for Nokia and Airtel.

In year 2008, Micromax realized the massive growth of Indian smart

phone industry and decided to dive in the market. After entering the
market Micromax fought the giants like Samsung, Nokia and
successfully made space in hearts of Indians.

Unfortunately, Micromax used to assemble and design all the phones

in Chinese manufacturing units because of comparatively cheaper
labor cost and wider availability of skilled labor. In year 2014,
Micromax displaced tech giant Samsung and became the largest
smartphone manufacturing company in India. Micromax also earned a
tag of major smartphone brand in the world by volume. At end of
2014, Micromax became a brand worth of 21,000 crore.

This was the time when Chinese manufacturers noticed potential of

Indian smartphone market and many companies like xiaomi, Vivo,
Oppo, one plus came into India. These companies have huge
advantage over Micromax that they don’t need to depend on others
for components and for manufacturing a whole device. Thus, this
helped them to cut the cost of production and more features which
will provide a better experience to users.

Fall of Micromax:

There are many reasons that made Micromax failed in India.

Micromax failed in maintaining the brand image of their products.
They stuck with the same low budget and midrange smartphone
categories while other companies were shifting their production line
to produce high end smartphones with much faster processors and
high-end camera setups. There are various companies who produce
such high-end phones even the sales of these phones is limited
because of constricted buyers and more options like apple’s I phones
and Samsung note and S series. But producing smartphones in this
category creates a good brand image in eyes of users. Now a days
smartphone is an another way to show off status and prosperity,
people literally avoid to buy phones of midrange companies. Here’s
the point where Micromax failed, being an Indian they failed in
checking the pulse of Indians.

According to Vikas Jain, co-founder, Micromax information Ltd,

Micromax found itself with a huge stock of 3G smartphones across its
supply chain, which it had to get rid of at a time when the market was
focusing on 4G devices. There were many reasons of why Micromax
failed in India.
Data Analysis and Interpretation:

Market Share and Units Shipped in Q1 2015

Brand Market Share % Units Shipped (in

thousands)
Samsung 21.3 97,986
Apple 13.1 60,177
Microsoft 7.2 33,002
LG electronics 4.3 19,637
Lenovo (including 4.2 19,280
Motorola)
Huawei 4.0 18,590
Xiaomi 3.2 14,740
TCL Communication 3.1 14,189
ZTE 2.7 12,600
Micromax 1.8 8,158
Others 35.2 1,61,901

Micromax seems to be growing at anchor pace. It was last year when

it overtook Apple and became the #2 tablet computer brand in India
and now it has entered the list of top 10 phone brands of the world.
Good luck Micromax! We hope that you will continue to launch a
mix of great value-for-money and entry-level smartphones at a
reasonable price tag in India

Smartphone Vs Feature Phone: which company has greater share in

Q3 2014?

The above 2 pie diagrams represent the companies which have high
market share in both Smartphone and Feature phone segment. Out of
all the companies, Korean mobile phone manufacturer, Samsung has
been dominating from past few years.

Samsung: In Q3 2014 Samsung came up with good no. of

Smartphones, we all seen Galaxy Note 4, Galaxy Note Edge, and
many more, all of these Smartphones are launched in September. In
addition to these Galaxy s5, Galaxy Grand, Galaxy S Duos, Galaxy
Prime etc are already available in the market, Galaxy S’X’ miniseries
have a considerable sale than the original versions. Mostly Phablets
are released by Samsung in Q3 2014. Out of all these Smartphones
Galaxy S Duos is the best-selling Smartphone for a price segment of
10K. This led the users (Teen) to experience a Galaxy Range UI with
a considerable price tag.
In feature phone segment, the already available mobile phones like
Samsung Metro, Samsung Guru music edition etc were on the rise as
they have basic specs which attracted the normal people.

Micromax: Micromax even hired Hugh Jackman for their

Smartphones promotion, but it doesn’t show a positive rise in the
sales, mostly it’s canvas Smartphones are huge hit as they were
released targeting the students, these Smartphones are offered with
many gifts on the festive season, this made users to buy Micromax
over Samsung, one best thing we can see in Micromax is it’s an
Indian based brand which sells the Smartphones for a low-end price
tag comparing to other Smartphone companies. As in Q3 2014 mostly
canvas series Smartphones dominated and the launch of Android One
Smartphone from Micromax improved their sales.
In feature phone segment, the already available Micromax basic
phones have their effect in the market share.

Lava: Lava is famous for its Xolo and its own brand, in Q3 2014, this
company experienced a major increase in Smartphone shipments, as
the sales of Lava iris and Xolo “Q” series have got overwhelming
response from the end-user’s side.

Karbonn: Karbonn is always in the competition since the starting of

this year, it came up with its Titanium series Smartphones and the
launch of Android One Smartphone hyped the company sales.
Likewise, the other Indian manufacturers Karbonn also released their
Smartphones targeting the Teens
Motorola: In Q3 2014, Motorola came up with its 2nd Gen line-up
Smartphones, in Q2 2014, Motorola came into existence with its 3
Smartphones- Moto E, Moto G and Moto X, out of these Smartphones
Moto E is the most selling Smartphone from Motorola. In Q3 2014,
successors of 1st Gen i.e., Moto G 2nd Gen and Moto X 2nd Gen. out of
these two, Moto X 2nd Gen is proven to be the best Smartphone
comparing with OnePlus One, Apple iPhone 6 Plus etc. This made the
users to go with Motorola 2nd Gen line-ups and made Motorola to be
in the Top 5 list of Smartphone vendors in India Q3 2014. We didn’t
saw any feature phone releasing from Motorola, their complete
concentration was on the Smartphone segment (Teen and
business/official people)

Nokia: Nokia has been in Indian mobile market since people started
using mobile phones. The most selling basic mobile Nokia 1100
classic is still the best one from Nokia, In Q3 2014, we have seen
Smartphones like Lumia 830, Lumia 730 etc but these Smartphones
aren’t up to the mark and the launch of Nokia X series in Q2 2014 had
a great impact in its sale on Q3 2014.

Others: More than 30% market share is in the hands of other small
mobile manufacturers, out of these some are newly entered into the
Indian mobile market; some of them are Asus, Xiaomi etc. Asus came
up with 3 Smartphones and gave a good competition to the Micromax
canvas series (direct competition to the Micromax Nitro)
and Motorola series. Xiaomi has been a hit in the Indian mobile
market with its Mi3 smartphone which was launched in August 2014.
Out of all these Smartphones listed, the Micromax, Lava, Karbon are
dominating, well, it’s because of only one reason, they are
manufactured in India, keeping in mind in targeting one class of
people (as per article it’s Teens). The price segment is very low
comparing with Motorola and Samsung. This made these Indian
mobile manufacturers to be in the Top 5 list.
In future we can see an overall market share to be dominated by
Smartphone segment than the Feature phone, as users are already
tending towards attaining the growing technology than to stick with
the old technology.

Conclusion:

All the mentioned strategies helped Micromax in augmentation its

market share and it penetrated deeper in the urban markets. It became
the largest GSM mobile marketeer in India leaving Nokia and
Samsung has again dominated the android market but Micromax with
its budget smartphones has been able to hold on a share of 17 percent
in the Indian smartphone market.
Micromax sells more than 1 million mobile every month. By offering
a product line ranging from mobile phones to LED etc Micromax
became the largest Indian mobile company that almost cannibalized
the market leader Nokia. Earlier in Q2 2014, Micromax overtook
Samsung to become the largest mobile phones supplier in India.
Having such a powerful grip on market and still failed in adopting
upcoming technological advancements which made them slow and
steady, even if slow and steady wins the race but in technical world
this phrase proves to be irrelevant because world is evolving by every
passing second and being in such dynamic market every business firm
should leave myopic vision and should have open and visionary
mindset. After the launch of 4G network technology, Micromax was a
latecomer in the class as they were stuck on producing the same 3G
phones. All these turnarounds has portrayed a great lesson to every
Indian business firm while being in such a volatile market.
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