Micromax was founded on 29 March 2000 by Rahul Sharma, Vikas Jain, Rajesh Agarwal, Sumeet Arora and Sumeet Kumar. It was established as an IT software company operating in the embedded devices domain but later entered the mobile handset business along with other electronic goods.
The company in 2014 was at its peak with a net valuation of Rs. 20,000 crores. At that time, it was a big thing because that valuation was massive for an Indian tech start-up which started only 14 years before that. It was then the 10th mobile seller in the world. 6 years later in 2020, there is hardly any news on Micromax. From such a massive company, it went down to 10% of its net valuation in just a few years. Let us take a deeper look into this matter and see about the fall of Micromax.
Micromax started as a supplier for GSM enabled PCO landline phones for big companies like Nokia and telcos like Airtel and others. The company at that time was earning well and at that time the economy was booming. The founders looked at the phone market and realised that it will be the future of India and they started to look for options to launch cell phones in India. Back then there was no such R&D in India that time and so Micromax started to look for options in China searching for Chinese manufacturing firms from whom they could buy phones and later sell in India after rebranding it.
Micromax phones were selling good then because of several factors such as low prices and affinity of people towards an Indian brand. They competed with bigger brands like Samsung and Nokia who held huge market shares at that point of time. Later the company launched a budget Android phone which was one of the first in that category and that was Micromax’s entry into the Android OS paved their way for their Canvas series. In 2010 the company reached heights and were going up exponentially. In 2013, they hired Hugh Jackman as their brand ambassador of their new phone Canvas Turbo. After a few months, they surpassed Samsung to become the largest selling brand in India and also became the 10th largest smartphone manufacturer globally. They then were huge enough to sponsor different events and concerts globally. That point of time they were the richest tech company in India, much bigger than Flipkart, Snapdeal and tech start-ups combined. They also diversified their business into other electronic gadgets such as televisions, air-conditioners. This was 2014 when Micromax was at its peak but the same year also turned down many things because then Chinese manufacturers like Xiaomi, OnePlus looked at India as a big market place and started their operations in India.
The Chinese phone makers had a big advantage over Micromax. Not only they were designing good phones, but also had a great R&D and they manufactured phones in-house. This not only helped them to build phones with better specs but also to keep them fairly low in prices and also sort out issues and fix issues that a phone had in a longer run. Later on, other smartphone brands such as Oppo, Vivo also entered the Indian market and things started to change for Micromax.
Even though Micromax was pushing the MAKE IN INDIA project, they were not really developing phones which led to their ultimate downfall. Before Xiaomi entered the Indian market, people had no respect for Chinese phones but Xiaomi worked really hard under the leadership of Mr. Manu Kumar Jain and won the trust of people with wonderful devices such as their Mi Series and Redmi series of phones. Micromax slowly lost grip of the market. They failed to understand the then market scenario and their biggest mistake was not to make a good R&D. They still bought phones from China instead of manufacturing their own products in India.
Later the CMO of Micromax left the company and then Micromax hired a team from Samsung led by Vineet Taneja who joined as the CEO of Micromax. He managed to bring the entire marketing team of Samsung into Micromax in an attempt to make the company stand again. Micromax then had a massive new office and a big team, but nothing was really organised in the company. Hence everything started to fall apart pretty quickly. The new team from Samsung couldn’t really understand the core of Micromax. They wanted to create new products but they were not efficient and that didn’t go well for Micromax. Slowly they started to lose out.
The one promising series from Micromax was the Yu series of phones and that was really loved by people but after two generations Yu stopped abruptly and suddenly started selling phones in offline markets. The company lost track and stopped their focus on developing phones.
Today Micromax is a fairly large company but as a phone brand, it has no respect in the market. They always suffered with customer support and services. This was purely because they were buying phones from outside. So, when the real manufacturer stopped making a phone, Micromax struggled to get spare parts of the phone which directly led to a bad reputation among the customers.
In a nutshell, we see that from a market cap of Rs. 20000 crores how Micromax went down to a market cap of about Rs. 2000 crores. It’s often necessary for big tech giants to understand the market scenario and act accordingly otherwise anything may happen to them irrespective of their size.