Why Indian smartphone companies failed? This was my favourite question in the past. And I think I have found the answer to that. Read on.
According to a 2014 article of Telecom Talk, the Indian smartphone companies had about 33% market share collectively in 2014, in India. Micromax, an Indian smartphone company, was in top 10 smartphone companies in the world at one point of time.
It was actually the 10th largest phone company by total shipments, in Q1 2014. Micromax had a market share of 20%, just behind Samsung which was at about 24%, in Q3 2014.
Fast forward to 2022, it has less than 1% market share in the Indian market. It always intrigues me, and I start questioning – are Indians not that competent enough to build a good smartphone?
Indians are excellent in aerospace and weapons but why not consumer tech? I keep asking this question. And that’s why I have written this post to tell you everything I have found and observed about the Indian tech space.
My findings and observations have led me to answer the question – why Indian smartphone companies failed.
Small history of Indian Smartphone Market, 2014-15
Indian smartphone companies were offering cheap, relatively good phones at budget price point to the Indian consumers. Their phones often looked like the ones from Samsung, LG, Sony, etc which many people aspired to have. It was a time when most Indians were not used to buying phones online due to various reasons like trust and warranty issues.
But then comes the Motorola Moto G (1st Gen) with great specs like that of Samsung, but at a lower price than them. It launched at Rs 12,000 and was an online only phone, in a Flipkart exclusive deal. No offline presence at all.
The specs? Great battery life, an HD display and a Qualcomm Snapdragon 400 processor. Cherry on top, was it only came in Stock Android, with minor changes to the UI. Nobody was offering Stock Android. It was in 2014 and the guys my age would know how much it mattered then.
The best and the major advantage of Moto G was that it was able to offer major android updates like the Android KitKat and the Android Lollipop. Moto G actually became a huge success pretty soon after its launch.
It sold over a million units within five months of its launch. I remember asking my parents to buy me this phone after I pass my exams but that didn’t happen. I was in 10th standard, so I obviously didn’t get it, lol!
Xiaomi Enters India.
The second big thing happening to Indian smartphone market was perhaps the Xiaomi.
In 2014, it came in India with Mi 3 and changed the whole industry with it.
Xiaomi offered Qualcomm’s flagship processor, the Snapdragon 800 at a price of Rs 13,999! It offered Corning Gorilla Glass 3, an HD screen, Android updates up to Marshmallow (Android 6). Talking about cameras, it came with 13MP cameras which only the giants like Samsung were offering. It shook the whole industry with what it was offering.
Great hardware at the cost of pennies.
Pretty soon, everyone was seeing Xiaomi as a budget alternative to iPhones, in Indian and across the world. Those who couldn’t afford iPhone, bought Xiaomi.
Similar specifications were seen in other phones like the Nexus phones that came at a price of Rs 25,000. They launched Redmi 1S, that was only Rs 5,999. It offered Snapdragon 400 and an HD IPS LCD display at that price point. It had to become an instant hit and it did. One of the great things Xiaomi did was they offered software updates to the Indian consumers. Those updates were mostly for its MIUI and not android, but improved the phones with new features which kept the novelty of their phones intact. Online exclusivity and great specs increased its word-of-mouth and drew people’s attention towards them. Xiaomi turned out to be a huge success.
Arrival of the Other Smartphone Companies In India
Witnessing Xiaomi’s and Motorola’s success, other Chinese vendors as well as one Taiwanese player entered in India. Oppo, Vivo, OnePlus, Asus, Coolpad, Tecno, LeEco, etc were a few names that had become good names in the industry.
The novelty factor of all these companies were – great specs, low price. And everyone was winning the Indian market. Except, of course the Indian smartphone companies themselves.
The Obvious Reasons to Why Indian Smartphone Companies Failed
Let’s first look at the very obvious reasons for Indian smartphone companies’ failure:
1. White-labeling
Majority of the smartphones that were selling in India were in the budget segment. Due to this smartphone companies didn’t invest much to make their phones better as it would’ve required spending more and more money. They treated phones as just another commodity and not a technology product which required lots of innovation.
2. Bad after-sales support
If you broke your phone while using by mistake and want to get your phone repaired now, you’d had to wait for months, to get it back repaired. Typically, one to two months of wait time was always there. Otherwise, you had to get to your local repair person, where they could’ve used inferior parts. This happened because service centers didn’t get parts on time for repairs. And this is happening still today.
3. No value for money factor
Since, they were in budget segment. they should’ve focused on it more. but they didn’t. Other brands, the Chinese ones, focused heavily on providing great hardware and software but keeping the prices low. They did it by just selling their phones online, while Indian companies didn’t do that stuff for quite a long time.
4. Tough competition from the Chinese smartphone companies
Chinese companies were the result of negligence and ignorance of Indian companies towards their own market. The things Indian companies did wrong were actually the things Chinese makers did right. They learned from the Indian companies failing in doing the following things-
- providing value for money products
- providing good customer after sales service
- investing heavily in R&D
- and finally understanding what the consumers wanted
You can further watch this video to get a sense of what I’m saying as half the part of this article is based on this video.
Reason why China dominates in the smartphone space.
Xiaomi and OnePlus were able to use existing technologies to build themselves rather than innovating first. This strategy is called ‘standing on the shoulders of the giants‘. But eventually they innovated and stayed relevant to their consumers.
This strategy allowed them to make high quality products while keeping the costs down. How? Because now, you’re saving on the R&D side. Although they made some innovations in the form of their custom ROMs – MIUI and OxygenOS, respectively.
They were able to make that happen because they had an immense tech ecosystem in their native land, China. China has an extensive R&D culture and manufacturing ecosystem, allowing great supply chain solutions. It has enabled various entrepreneurs to make consumer electronics and related products.
This is the reason why there are so many Chinese tech companies (Huawei, Xiaomi, BBK) as big and sometimes more powerful than the South Korean (Samsung, LG) or the Japanese (Sony) or the American (Apple, Google, Microsoft, Intel) tech giants.
India simply doesn’t have a mature tech ecosystem and suffers with supply chain issues because India doesn’t manufacture anything on its own. Although, things are changing in manufacturing segment but at a super slow speed because not major components are being manufactured. It has actually just started recently with companies like Boat and Mivi.
Even Google, who has a cash pile of $113 billion, can’t make good enough phones as compared to Apple, Samsung or any Chinese vendor. In the past, Google has made a statement ‘hardware is hard’, in the context of smartphone manufacturing. They said it because creating successful hardware products often involve complex supply chain and manufacturing processes that require careful coordination and quality control.
Why Indian Smartphone Companies Failed – The Real Reason
Supply chain issues is the real reason why Indian smartphone companies failed.
To understand what I am trying to convey, read these points carefully and slowly:
- Advantage: The global smartphone market is highly competitive, with many established brands dominating the space. These brands have well-established supply chains and manufacturing processes that have been refined over many years. This gives them a significant advantage over newer or smaller competitors.
- Ecosystem: India’s manufacturing infrastructure is still developing, which can make it challenging for companies to manufacture products at scale. India’s manufacturing sector faces challenges such as inadequate infrastructure, high costs, and regulatory hurdles. This makes it difficult to compete with other countries that have more mature manufacturing ecosystems.
- Cost: Many of the materials and components used in smartphones are imported from other countries, which makes the supply chain more complex and costly for Indian companies. This impacts the overall cost competitiveness of Indian smartphone companies compared to global brands that have established supply chains and sourcing arrangements in place.
- IP: Intellectual property rights and patent disputes also create barriers to entry for Indian smartphone companies. Particularly if they are relying on existing technologies that are already patented by larger global brands.
- Will: The Indian smartphone industry doesn’t have its own Bhavish Aggarwal (Ola) or Deepinder Goyal (Zomato). These two are one of the fewest folks in Indian tech that are solving the manufacturing and supply chain issues in India. Unfortunately, we don’t have them in the smartphone market.
The last time it happened was with Rahul Sharma of Micromax, who tried to do some solid work with his new company – Yu.
They were doing fine but within 2 years maybe, they again showed the characteristics of being Micromax. And this is also the reason to why Micromax company failed in creating great Indian smartphones.
What Next?
To compete with larger global brands in the smartphone industry, Indian companies will need to focus on building their own supply chains and manufacturing ecosystems.
In addition to that, investing in research and development to develop unique and innovative products is also needed. They will also need to be strategic in their sourcing and supply chain management to ensure that they can compete on cost while still delivering high-quality products.
These steps would require money. Lots of money. And once they do sort their stuff, the prices would increase dramatically.
And therefore, now they cannot win the market on price game because their products are now more expensive than their competition, which is the Chinese makers.
So, what do you do now?
This, ladies and gentlemen, is exactly the real why Indian smartphone companies have failed in making phones and competing with other players.
Any possible solution to this?
There’s only one solution to this problem – do not compete with the Chinese at all.
Instead compete with the giants because that’s the only segment where prices don’t matter that much.
You start with making high end, flagship phones. Invest whatever money you have to just making a great flagship phone. The budget would be about $200-300 million, according to Carl Pei, Nothing’s founder.
And now, as a company, you’ll only make high end phones and consumer tech because you first need to have quality tech to compete with the Chinese later.
Now after a few years, you’ll be a giant and then several small companies would stand over you to make cheap phones. Based on your tech and innovations. And now you can successfully compete with the Chinese.
OnePlus, Xiaomi and now Nothing, all did the same thing. They just competed with Samsung, LG, HTC and Sony.
You can see where most of them are standing today.
I’ve spent a lot of time thinking about it, and this seems to be the most plausible explanation for it. In addition to the obvious reasons, this is the most overlooked aspect of the question for which we all wanted a good answer. I hope this has provided some value to you and a new perspective towards technology in general.
Thank you for reading.
