Wednesday, February 06, 2013

Micromax’s quest for the 2nd spot

It was a rather quick climb up the ladder for Micromax. So far, so good. But even after becoming the third-largest handset vendor in India, it has a steep climb ahead, with threats in the names of both new entrants and seasoned players... Will it win the ‘Silver’ soon?

Two years into the business, and you dare to challenge the #1 & #2, even in a cluttered market; that for you is Micromax! It started as a distributor of PC hardware (for brands like Dell, HP and Sony) and after seventeen long years, felt the need to grow as an independent brand. Four friends got together – Rajesh Agarwal, Sumeet Arora, Rahul Sharma & Vikas Jain – and decided to grow their business. Many ideas poured in during the umpteen brainstorming sessions that the four conducted amongst themselves. Finally, they decided to bet big on Sharma’s idea – to marry mobile handsets and rural and price-sensitive India. Thus, the company’s first phone (the X1i), was born in an environment that would transform into what would be proudly called the second-largest mobile market in the world, next only to US, with about 10-12 million subscribers being added every month. Better news for the four friends, as trade pundits are predicting that the current growth momentum in the telecom industry will last till atleast 2012.

Despite all the good tidings, it still comes as a surprise that a new entrant has managed to make such a deep dent in the crowded domestic handset market. Micromax is currently the third-largest GSM vendor in the Indian market, with a share of 8.1%, perhaps just a few notches behind Samsung who at the second position has 10.4% control, as per market reports. [Nokia with 52.7% share is the number 1 vendor]. Micromax has been selling anywhere around a million handsets every month, for the past year, and as company officials state, it has earned about Rs.15 billion in revenues during the past year. So here’s something to digest – going by the numbers, the Indian handset market is estimated to have sold about 130 million handsets units in the last calendar year alone, which implies, that if we were to consider just the sales during the past 12 months, Micromax has a market share of 9.3%, much closer (as compared to the previously stated 8.1%) to the 10.4% share of Samsung!

And there is a lot more to be had from a handset market that currently, only has a tele-density of 49.5% and has supposedly clocked a turnover of over Rs.200 billion over last year. Little wonder, that many global bigwigs like Nokia, Samsung, LG & Sony Ericsson have time and again referred to India as one of their key markets. But with great opportunities, come greater challenges, and the same is true for the #3. Once, Micromax was a challenger; today it is also being challenged by many entrants like Karbonn, Lava, Maxx, Intex, Lemon, Gee Pee, Videocon, Usha Lexus, Orpat, Airfone and many more... Talking about the growing count of challengers, Deepak Kumar, AVP, Research, IDC India says, “The number of emerging mobile handset vendors in the India market had grown to 26 in Q2 CY2009 and their contribution to overall shipments in terms of units crossed 6.3% for the first time during the 12-months leading to June 2009. This is as against only 11 emerging vendors representing a share of 1.2% of overall shipments during the previous twelve-month period.”


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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