In an age of globalized brands dominating the marketplace, the ascent of Micromax was a much celebrated story. Here was a local company in a high-octane, ultra competitive industry taking on super-heavyweights like Samsung with ease and dominating the local market for smartphones.
Micromax was much more than just a successful phone company. It epitomized the new India, wooing hip youngsters with affordable devices catered to them, with no other than Mr. Hugh "Wolverine" Jackman as their brand ambassador. Even as far back as two years ago, no one was doing this as successfully as Micromax. The company also had the audacity to spread its wings to other parts of the globe -- becoming the third-largest phone company in Russia in just two years, for instance.
All that now seems a distant dream. In just about a year, Micromax's market share in smartphones has plummeted from a healthy 22 percent (at its peak in end-2014 where it actually eclipsed Samsung, according to some analysts, to become the largest phone-maker in India) to a startling low of 13 percent, according to research outfit IDC. This renders its assertive logo of a "punch", the result of a crowdsourced branding exercise a few years ago, into a cruel joke rather than a metaphor for its assertive success.
This is not what should have happened to the leading Indian smartphone maker, that too in the hottest smartphone market in the world where shipments have been skyrocketing -- by 29% to 103 million units last year when compared to 2014. However, instead of flying off shelves, Micromax's phone sales actually slumped 12 percent in the last quarter of 2015 while the sector was growing 15.4 percent. It is the only brand in India to suffer the ignominy of a decline in growth in a sizzling market.
So why did Micromax lose its punch?
"What the Indian brands did to the global brands two years ago, Chinese phone makers are doing to Indian brands now, and over the next year we see tremendous competition for Micromax and other Indian smartphone makers," said Tarun Pathak, analyst at Counterpoint Research in New Delhi, in the Mint newspaper article.
The cruel irony for Micromax is that the same Chinese companies that manufactured Micromax's devices such as Gionee and Oppo are now firmly entrenched in India, and their phones are increasingly becoming attractive options to Indians to the detriment of Micromax's models.
According to IDC, Chinese brands collectively dominate a staggering 22 percent of the market, up from 12 percent just a year ago. If rock-bottom prices weren't enough of a carrot to value-obsessed Indians, a no-hold-barred media onslaught boosted the fortunes of the Chinese companies. Apparently, four Chinese firms -- Vivo, OPPO, Gionee and LeEco -- collectively spent 55 percent of the 1,200 crore rupees ($200 million) shelled out last year for advertising smartphones in India. The slowdown in the Chinese smartphone market meant even more of a working capital imperative to try and corner the Indian market.
Lenovo is the other huge success story in India, taking valuable share away from Micromax by going from a 0.6 percent share in 2014 to a staggering 10 percent, thanks largely due to the phenomenal success of its Moto line of phones. Chinese companies have also been aggressively harnessing ecommerce channels such as Amazon and Flipkart in flogging their phones and reaching the ballooning category of online shoppers rather than relying on retail outlets like Micromax does.
Of course, according to news reports, Micromax didn't help their cause by not being able to attract funding when it most needed it, including failing to land big fish such as Alibaba (who were interested in picking up a 20 percent stake for $1.2 billion) allegedly because of unclear growth plans.
This means that its plan to move its R&D and design functions in-house -- something Micromax sorely needed to cleave itself from China, save money, and enhance time-to-market -- capsized. And then, last week its CEO Vineet Taneja quit.
For Micromax to reverse its unexpectedly dismal fortunes, it needs to put in strong leadership who can keep an eye on quality control and after-sales service as well as sculpt a clear agenda for the future, especially in an environment of vicious competition. Also, the brands that have done well have done so with a few products -- perhaps Micromax's dizzying line up is proving to be more of a liability than anything else.
Finally, in an era where smartphones are more and more cheap commodities and every Android phone looks and feels like the other one, you have to work very hard to differentiate yourself. Engineering a rescue act with a new product identity will take some doing.