Micromax, Facing Stalled Smartphone Sales, Sets Sights on Venturing into Electric Vehicles
Amid sluggish smartphone sales, Micromax shifts its focus towards entering the electric vehicle market.
Micromax, a once dominant player in the Indian mobile phone market, has faced challenges in recent years due to increased competition, technological advancements, and a slowing market. Despite potential remaining relevance as a mobile brand, indications suggest a shift towards a new focus: electric vehicles (EVs).
This transition, however, has been accompanied by significant hurdles. Reports reveal substantial job cuts at the company's headquarters and branch offices, affecting various departments including sales, product, testing, R&D, and logistics. Key executives, including the chief business officer and chief product officer, have also resigned. Notably, Micromax's latest smartphone model was introduced in April 2022.
While Micromax has refrained from commenting on these changes, signs of strain are evident. Social media posts highlight the company's reluctance to address consumer concerns, and distributors struggle with unsold inventory due to low demand for Micromax phones. Online search trends for the Micromax brand also underscore a decline in public interest. Amid similar struggles faced by other older brands, Micromax is rumored to intensify efforts for a resurgence.
Navkendar Singh, associate vice president at market research firm IDC, notes the intensifying competition among the top smartphone brands, making Micromax's previous leadership position a distant memory.
The potential move into EVs involves launching a new brand that initially focuses on two-wheel electric vehicles, as indicated by sources who recently left the company.
This transformation would not be the first for Micromax. Established in 2000 as an IT firm, it ventured into mobile phones in 2008. Starting with affordable feature phones, it later entered the market of budget Android smartphones and tablets. Micromax strategically disrupted pricing to challenge Samsung's dominance, becoming a pioneer in affordable sub-$200 smartphones. Leveraging its China-based supply chain, the company introduced cost-effective models that mirrored iconic iPhone designs.
However, Micromax faced a setback in 2016 when Reliance Industries launched its 4G network, excluding Micromax due to its lack of 4G-ready devices. This oversight, along with internal disputes and sales challenges, impacted the company's fundraising efforts.
According to PitchBook data, Micromax raised approximately $98.02 million, with a reported post-money valuation of $745.57 million in 2010. Notable investors included Peak XV Partners, Sandstone Capital, and TA Associates. Changes in ownership were recorded, with TA Associates affiliate Wagner selling its equity stake to Placid Holdings in January 2020 and repurchasing those shares in March 2022.
In September 2016, a significant setback emerged as Mukesh Ambani's Reliance Industries launched its 4G network under the Jio brand. Access to the network was limited to a select group of brands, excluding Micromax due to its absence of 4G-ready devices, which primarily targeted the lower end of the market.
"Micromax failed to foresee the rapid shift from 3G to 4G," remarked Ajay Sharma, former business head at Micromax, highlighting a common challenge faced by other Indian vendors as well. These sales struggles exacerbated tensions between Micromax's founders and executives, hindering the company's efforts to secure funding.
PitchBook data indicates that Micromax successfully raised a cumulative $98.02 million in investment. Notably, the most recent post-investment valuation, dating back to 2010, stood at $745.57 million. Prominent former investors include Peak XV Partners (formerly known as Sequoia Capital India & SEA), Sandstone Capital, and TA Associates. In a notable ownership shift, the last official audit report filed with Indian regulatory authorities disclosed that Wagner, an affiliate of TA Associates, divested its complete remaining equity stake to Placid Holdings in January 2020. Subsequently, Micromax reacquired those shares from Placid Holdings in March 2022.