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A thread on what happened to one of the most talked and hyped Indian phone company #Micromax
1. It dates back to year 2000 when Micromax Informatics was founded as a software company by Rahul Sharma and his friends in Gurgaon who had just come out of college and wanted to venture into a "dot com" which was booming during 2000s.
2. It was that time when coin phone was a big trend which enabled people in remote areas to connect with family and friends. These phones looked like landline but didn't require the wiring as it was operated using a SIM and benefited multiple people with a single SIM. Image
3.Micromax became an important supplier to Nokia, who had then got the licence to install such phones all across India. These were used to set up call centres in India. Micromax rapidly rose!
4. In 2004, Nokia very soon sold off their business globally. But they still continued supplying the specialised technology to other telco companies like airtel etc. They also made Micromax branded phones and installed many in Jammu. Soon 10cr revenue for converted to 100cr.
5. In 2008, the founders saw a potential for mobile phones(keypad) in the changing market where Nokia was already a big player. Hence they started coming up with phones which met Indian specific demands like long battery, dual sim etc. Within no time went on to become a huge hit.
6. It also ventured into smartphones as the market changed slowly and in the year 2010 were among the first ones to bring budget Android phones to the masses, the A60s. Which have other big players like Nokia and Samsung run for their money. Image
7. In 2014, it dethrones Samsung as the largest mobile manufacturer/seller in India. 10th biggest in the world. The company is now valued upward of Rs. 21000 Cr making it the most valued tech startup in India, more than Flipkart. Image
8. By 2015, was a time where one couldn't not switch off the tv without seeing a Micromax ad on TV. It was literally everywhere. They got the sponsorship for most crucial cricket series. They even sponsored Bryan Adams concert. Also worth mentioning Karbonn Kamaal catch in IPLs. Image
9. Yes they were everywhere. They also got Hugh Jackman as their brand ambassador globally, a cherry on top. They were the first Indian company to make a mark in Russia. At this point, there was no looking back. Whatever they touch turned into gold and came up with TVs & ACs too. Image
10. But here is the twist in the story. A quick flashback as to how they made phones. Not many people know that Micromax never manufactured their own phones nor did they have their own R&D centre. Hard to digest the fact that a 21000Cr worth company couldn't make a single phone.
11. Here comes the term OEMs and ODMs(Google for yourselves). Micromax and other Indian companies like Karbonn, Intex, Lava, the big players which were among top 5 in India, unluckily had to heavily rely on Chinese companies like Oppo, Gionee, Coolpad to make phones for them.
12. These Chinese companies were way ahead of the time and had a good infra to make phone with advanced tech. They had complete control and knowledge over the design, manufacturing and after sale service. These companies also had their own factories and R&D centres.
13. Micromax also believed in selling the phones in batches as in 'order batch of say 100000 phones-> Sell them-> With the money earned order another batch-> Sell them *repeat*. It seems this was their core idea of making business.
14. There is something called MOQ or Minimum Order Quantity which Chinese ODMs follow to secure a deal to make phones for its customers. MOQ is a term which sets a minimum number of quantity to be manufactured by the Chinese ODMs(like Oppo) for its customers(like Micromax)
15. MOQ that Micromax agreed was for whopping 500000. Chinese suppliers could customise their products only if it was ordered in bulk quantities. So it was a big inventory problem.
16. And then came the launch of Jio in 2015. Along with that, also came free 4g internet which took Indian market by storm. When Jio announced it and made it free, the market went bonkers. But Micromax had already hugely invested in 3g and remember they have an inventory problem.
17. Turn the page. Chinese enter and following years saw the downfall. In 2015, the Chinese giant MI aka 'The Apple of China' announced they would enter Indian market through online platforms.
18. Some wise man once said, 'What goes up, must come down'. After 2 huge blows in the same year, 2015 started seeing the end of an era of Indian smartphone companies. The company had already invested hugely in retail stores and 3g phones.
19. The Chinese saw a great potential in Indian market. The ODMs who use to make phones for Indian companies started to make their own phones and directly sell it in India. MI were the first ones to bring flash sales online and was an instant hit. This way Chinese saved money.
20. Micromax wasted lot of money at the same time. India was a selfie crazy nation, in 2014, 60% of selfie deaths happened in India. Oppo and Vivo started advertising their phones as Selfie centric phones which attracted customers. Also getting them to attain a customer base.
21. An interesting fact is that Micromax had grown so big it even stopped OnePlus from selling it's phone with Cyanogen in India. Micromax had incurred major expenses in creating 'Cyanogen OS brand exclusivity' in Indian market. This is where Oxygen OS takes its birth. Image
22. But that didn't stop Oneplus from coming up with 'Flagship' killer tag and alao went on to become a huge success story and attained a permanent spot in premium segment. And companies like Oppo, Coolpad, Gionee continued to backfire.
23. Proud owners of Micromax couldn't get the service done as their support was awful and they heavily relied on Chinese counterparts for spares. Chinese stopped making components once they sold the complete batch. Hence Micromax users either had to wait few months to . .
. . to get their phones back or wait indefinitely when the components were not available. The customers were pissed of by now.
24. With coming of MI and Oneplus, they changed the perception of chinese phones in India 'Phone having 4 SIMs and 8 batteries' to 'quality no non-sense neat smartphones' with customer centric features. Redmi 1s and MI 3 were instant hit and top sellers of its time. Image
25. Oppo and Vivo subsidiaries of BBK electronics, who also owns OnePlus also spent massive money on ads, hoardings and huge banners. The blue-green worked excellent for them. The retailers also got incentives by using their banners for the shop and on top of it more commission. Image
26. When Micromax was operating with 20% margin, Chinese started selling their phones with 5% profit margin decreasing the costs. They also eliminated middleman by selling directly online lowering the cost to greater extent. Made phones in Indian factories eliminating customs.
27. MI also had online community and started taking inputs from customers very seriously and sent frequent updates to address their issues which the Indian companies lacked big time.
28. As these companies grew bigger, they made more money, invested hugely in ads and gradually started increasing the price and people were ready to pay more for the kinda quality and support they saw in them. Got celebreties like amitabh for OnePlus earned trust in the audience. Image
29. Fast forward to 2017, the Indian phone makers were completely swept away and the market was flooded by Chinese makers like Oppo, Vivo, Mi, Oneplus and were showing their dominance. They had occurred top 5 spots in India. Image
30. What went wrong?
Indian companies lacked R&D centres. Never invested in manufacturing units. Very late to adapt to changing markets. Ignored support and service. After all they were just selling rebranded Chinese phones with Indian name on it. Underestimated their counterpart
31. Alibaba also offered to buy 25% stakes in Micromax but only to end up cancelling the deal when Alibaba wanted to control the stakes.
31. To sum it up, the Chinese companies have finally built an empire on Indian companies' grave. In fact 2010-2019 is often referred to as Indian tech's depressing decade. Even if we set up our own factories now it'll be a decade to catch up with other leading companies.
33. Once 21000 Cr net worth company has now gone down to 1500Cr. Rahul Sharma whose net value was ~4000Cr back in 2015 has gone down to 400Cr. He got married to a popular actress Asin in 2016 and leads a lavish life in his 3 acre mansion in New Delhi. Image
34. Recently in 2019, he also founded an AI based 2 wheeler electric company called 'Revolt Motors' and is leading from the front. Hope he learns from his previous mistakes and makes it big in India and the World with REVOLT MOTORS. Image
Source- Economic times, Wiki, The iGadgets World
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