For Indian Smartphone Brands - Is There Light At The End Of The Tunnel?
The fall of the Indian brands is attributed to only two reasons – No or lack of R&D, and the failure to read the arrival of 4G. For me it goes beyond just these two reasons. I have tried to list down the ‘Hits and Misses’ of the Indian brands since their launch till the present.
For the Indian brands, the period of 2008 to 2010 was a super joy ride. It all started with their entry in the feature phone segment. And, the fast and phenomenal scaling-up of volumes on the back of a strong demand for low priced phones with differentiators like Dual SIM, Long battery life etc., which addressed the needs of the customers not being fulfilled by the global brands. They had smartly identified the nascent opportunities and capitalised on them. Within no time they had arrived. This was their first hit. Score: Indian brands Vs. The Others – 1 – Nil.
Come 2011, with the rise of demand in smartphones, and the excellent response to the Android OS, they again saw an opportunity and decided to work on a low price/specification ratio to disrupt the market. Brands like Micromax took the first mover advantage with increased focus through a dedicated sales/service team and a new exclusive distribution set-up. The results came in fast with Micromax overtaking the leader Samsung for some time in terms of market share in 2014. The rub-off effect helped the other three leading Indian brands. So far so good. And, this gave them their second hit. Score: Indian brands Vs. The Others – 2 – Nil.
Given the low penetration of smartphones in the Indian market and its high potential, the success of the Indian brands with their trading model was too obvious an opportunity to be missed by the Chinese. #Lenovo in December 2012 and #Gionee in January 2013 entered the market. The Indian brands specially #Micromax still had the momentum behind them with their first mover advantage and possibly took matters lightly. To some extent, the figure of a little less than 7.6 lacs for Gionee and 3.4 lacs for Lenovo in the calendar year 2013 did not seem to worry them too much. Actually, what everyone missed is that Gionee had done close to 3 times and Lenovo close to 4 times of what they had done in H1 in H2. Now, this was their first miss. Score: Indian brands Vs. The Others – 2 – 1.
Come 2014 January, things changed. Gionee sales started shooting up and they were clocking 2.35 lac phones a month in H1. However, Lenovo was still not growing at that pace just about touching 1 lac phones in April - 16 months after entering the Indian market. #Oppo had already entered the market in January 2014 with a sale of 50 Thousand in H1 to 1 lac phones in H2. The slow growth of Lenovo and Oppo made the Indian brands complacent, and with Chinese distributors handling state distribution for Oppo, the general feeling was that Oppo will take time to understand the Indian market and challenge the supremacy of the Indian brands. Little did they realise that things would further complicate by end 2014 with the entrance of Vivo. This was 2014 and their second miss. Score: Indian brands Vs. The Others – 2 – 2.
The year 2014 also started with the tie-up of #Motorola with #Flipkart. Flipkart sold 1 million phones of Motorola in 5 months of H1 - a record of sorts. Come H2, #Xiaomi followed suit with a partnership with Flipkart to enter India. Their Flash sale model and a “Sold Out” banner within 30 minutes became the talk of the town. Their PR machinery with pictures of cargo planes shown carrying Xiaomi phones accelerated the hype. While the Indian brands mainly Micromax had a presence in the online channel, the importance it should have got was missed by the Indian brands. That smartphone volumes could be driven through the online route was now a reality. The third miss of 2014. Score:Indian brands Vs. The Others – 2 – 3.
Till now the Indian brands were selling mainline with the slogan “Technology for the masses” which actually meant high specifications at low prices. Xiaomi hijacked this USP from the Indian brands and hit them exactly in a way the Indian brands had hit the global brands some years back. The Indian brands did not have a Plan B. This was the fourth miss in 2014. Score: Indian brands Vs. The Others – 2 – 4. Come 2015, the Chinese mainline brands like Oppo and #Vivo were putting big time pressure on the Indian brands with better quality product offerings, better service to the end customers and much higher margins, promoter support, support for display and shelf space for the retailers. Indian brands did not match them in any of these. Indian brands continued with their “Push” strategy. This was the fifth miss. Score: Indian brands Vs. The Others – 2 – 5.
2016 was the beginning of the end as I would put it. It was the year of 4G. While the Chinese brands were already making 4G phones for their home market and could shift to 4G phones for India quickly and in-time , the Indian brands were caught napping. They had 3G phones at each level – In the factories in China, in their warehouse and even with their channel. The decision making at that time had to be quick. Cancel what they could, liquidate what was with them and their channel, and get 4G stocks in quickly. It was a question of a one-time hit to clear the system of 3G, but the sheer value of the hit must have made them take half decisions which did not help them or the channel, leaving everyone unhappy. Their channel, already finding it difficult to fight the Chinese, felt they had been left high and dry and many of the “real” distributors started migrating to the Chinese brands. Most of the big distributors of leading Chinese brands have at some time or the other been Micromax distributors. This was their sixth miss. Score: Indian brands Vs. The Others – 2 – 6.
Micromax did try to take on Xiaomi online with their exclusive India tie-up with #CyanogenOS in the beginning of 2015 under the banner of a new company YU Televentures. They were successful in terms of the volumes initially online and then offline, but apparently the venture did not turn out to be profitable and finally YU was merged with Micromax in 2017. A good attempt that did not work for long, The seventh miss in 2017. Score: Indian brands Vs. The Others – 2 – 7.
2017-18, the slide continued. However not all was lost. While they may not have been able to reach the heights achieved earlier, there was still an opportunity for the Indian brands to be a respectable player. Too many changes in the management, different styles of working of the owners, delays in decision making, “we know what we are doing” attitude, wrong commitments by the team, a business model based on the old concept of pushing stocks in the channel with high credit risks did not help matters. This was the eighth miss. Score: Indian brands Vs. The Others – 2 – 8.
Come 2019, with the rising tensions between India and China, nationalism took centre stage. Videos on rebranding and a come-back got a lot of views and supportive comments but few customers. The brands, it was clear, had lost mind share be it with the channel or the customers. This was the ninth miss. Score: Indian brands Vs. The Others – 2 – 9.
A cat has nine lives. The nine misses represent that. As far as I am concerned, it may just be Game Over for them as brands. They could continue to sell Feature Phones. Since they do have good factories, they could make phones/TV’s for other brands and operators in the US. Possibly that may be the best way forward for them.
Hopefully there is another chance left. Having worked with them, I would like to be proved wrong. However, based on what I am hearing and seeing, I don’t see it happening.