From being India's number one mobile handset manufacturer in terms of units sold a year ago, Micromax is now struggling to cope with an intense competition from Chinese handset-makers and in-house management issues as its market share has nearly halved, according to a Reuters report.
India, being one of the fasted-growing smartphone markets in the world, paved the way for many homegrown mobile handset companies to spread their wings. They'd outsource their manufacturing to China and offer competitive products priced aggressively. A blend of good prices and quality products made Micromax a leader in the Indian market, but competition from Chinese manufacturers offering better products at even better price points along with Micromax's nearest competitor Samsung jumping aboard the budget smartphone train is spelling disaster for Micromax.
"What the Indian brands did to the global brands two years ago, Chinese phone makers are doing the same to Indian brands now, and over the next year we see tremendous competition for Micromax and other Indian smartphone makers," said Tarun Pathak, analyst at Counterpoint Research, in New Delhi.
Other reasons for Micromax's downfall include internal management issues ranging from lack of funding to conflict between key managerial staff and a slew of executives leaving the company recently. However, in what could be termed as another important reason for Micromax's falling numbers is the company's failure to strike a deal with Alibaba in its efforts to raise funds.
In May 2015, Alibaba backed out from a deal to purchase a 20% stake in Micromax for $1.2 billion, citing lack of clarity on Micromax's part with regards to growth, says the report.
While things may seem bleak for Micromax at the moment, ibnlive.com reports that it still holds a 14.3 percent share of the smartphone market. Samsung has a 23.6 percent market share in the same category. The Reuters report also cites Micromax as a top ten player in Russia and is looking for partners to expand to international markets.
"Micromax needs to diversify geographically and also needs to diversify product lines," said Neil Mawston, executive director of the global wireless practice at London-based research consultancy Strategy Analytics. However, Mawston is also quick to add that it's important that Micromax handles the diversification well.
