The cycle of who gains supremacy in the mobile phone handset
market has taken a fantastic turn and this time Samsung; the world leader in
terms of market share, is on the receiving end this time. On terms of sheer numbers,
China and India are the largest markets for mobile handsets and local companies
from both countries: Xiaomi and Micromax, have taken control as market leaders
respectively. While both markets are fast upgrading to smart phones, the
erstwhile leaders: Samsung and Apple are headed towards choppy waters.
Xiaomi; the new king of the market in China is just 4 years
old and direct entrant with Android based smart phones. Its MIUI firmware was
dubbed to be an aping of Samsung and Apple, but its flagship Mi series has
definitely caught the frenzy of people. With over 10Mn Mi-2 models sold in 11
months leading up to September ’13, Xiaomi has captured the Chinese and East
Asian markets in a serious and rapid. The company is unknown in Europe or the
Americas- but its sales from Chinese mainland and parts of East Asia are good
enough to make it the 5th largest smart phone vendor in the world.
Xiaomi is a case study in itself of how a goal oriented
approach of a company which began with no manufacturing or sourcing avenues has
risen to take up a gigantic shape. To gauge why this is something worth
knowing, just put in perspective the following; Made in China: Cheap and
unreliable. Though 90% of electronics vendors are from China but have contracts
with bigger players who invest in their facilities and so the manufacturing is
closed door and customised to their needs. As many as 85% vendors rejected the
offer to associate with Xiaomi. So how do you win against such odds?
Founder Lei Jun, who was an already established entrepreneur
and billionaire from his previous ventures in the 1990’s, hired a set of executives
from Google, Motorola and Microsoft. Their efforts in developing the MIUI
Android platform ensured newer capabilities every week. A strong feedback loop
from beta users and other customers helped them evolve faster and at lower
cost. A tie up for touchscreens with Sharp Japan in 2011 was a boost at a time
when business with post Fukushima Japan was at its lowest. The faith by Qualcomm
in the MIUI platform and the assembler of Apple; Foxconn agreed to set up
assembly for Xiaomi.
Someone might argue that you can capture a market if you
have a product at an affordable price; in Xiaomi’s case- roughly half of what
an Apple or Samsung sells. But unless there is a decent level of quality offered,
no one can succeed in a mature market where consumers are informed. From the
launch of its first phone in August 2011, Xiaomi surged past Apple by end of
2013 and had Samsung under its heel by August 2014- yes, just 3 years.
The story in neighbouring India with Micromax is equally
enthralling though. It started off as a software company in 2000 and got into
mobile phones only by 2010, much the same as Xiaomi. While the urban Indian was
spoilt for choice with Samsung, Nokia, LG and Blackberry, Micromax went after
the bottom of the pyramid. Its co-founder, Rahul Sharma was inspired to counteract
the power outages in rural India. Micromax X1 was the first phone launched with
a battery capacity of 30 days.
This was a time when some 26 mobile phone brands came into India
in a span of 12 months with a similar model of manufacturing hubs in China and aim
to capture the low spending-high volume end of Indian market. But Micromax made
a distinction for itself by offering Indians not a low end Nokia or Samsung look
alike sporting a T9 keypad but the experience of a QWERTY and dual SIM options.
While rural was a focus, Bling- a swivel QWERTY phone with Swarovski crystals
and a mirror became an instant hit with urban women. Bling was one of
Micromax's highest selling models. It was also high on experimenting with the
Android platform and came up with the Canvas phablet range in 2011.
Micromax did everything right when it came to marketing
itself and can be a great example of the bottom-to-top approach. Hiring Akshay
Kumar as its brand ambassador, sponsoring cricket tournaments etc. built awareness
for the brand across consumer bands, while a slow and steady build-up of ground
network of retailers and service centres built market visibility. The carrot
they offered; better margins than anyone else. If the Apple and Samsung’s of
the world were out of the pocket range and the Nokia and Blackberry empires was
crumbling under the Android wave, Micromax was one of the better known so
called low end look- alike and do-alike in the market which enjoyed the retailer push and cost a third of a Samsung of the same specifications.
When Canvas was launched, the advertising was one with an international
look which was boasted then by Samsung and LG. This was a stage when the brand
built an image suggesting that it could offer the functionality of a bigger
brand at a smaller price tag. But the use of international star like Huge
Jackman in its ads gave a sign that Micromax meant business and washed away its
me-too perception in the market. With the launch of their assembly unit at
Uttarakhand in 2013, the ‘Made in China’ tag is also soon to be cleared off its
phones.
The two Asian giants are likely to encounter each other head
on very soon. Micromax has gone global with Russia and SAARC, while Xiaomi after
East Asia has entered India. Xiaomi’s launch on Flipkart saw its sticks wiped
off the shelf in under a minute- which kind of talks of its level of awareness in
India already. But one thing is for sure; even if Samsung might refute the
survey figures and claims to have not lost its market share, the brands once
termed the clones have attacked and the ground is set for them to assume clear
leadership soon.
