[Tech Talkies] Rahul Sharma and Micromax – “Sometimes in life you have to say no”
“Do we really need to talk here? The table is too messy…”
Rahul Sharma points to a table that is covered with phones. As usual. A geek’s dream, maybe, but perhaps not quite the Micromax CEO’s cup of tea for a chat. When we insist it is perfectly all right (hey, we love talking with phones all round), he settles down, tall, slim frame almost blending into a chair.
“I liked your article,” he says to Akriti, referring to a piece she had written on TechPP on Micromax’s silence in recent times. “What gave you the idea?”
“Well, my mom wanted a new Micromax device,” she replies. “And when she went to the market, she found that there were actually no new devices from the brand that she wanted…”
Rahul nods. “Fair point. Some considered that article to be negative, but fair enough, we have not been talking too much, have we?”
“We said, ‘let’s take a step back'”
Which of course, leads us right to the first question: what was with the silence around Micromax in the latter half of 2016, and actually, for almost all of 2017? For a brand that was known to be launching multiple models in a month and often taking on adversaries in high-profile ad campaigns (even the mighty iPhone had not been spared), the company had been surprisingly silent, with very few launches and no major event since the launch of the Yunicorn in mid-2016. With the Chinese rapidly expanding their share in the Indian market, the perception was that Micromax, once among the top ten smartphone brands in the world, and all to briefly, even the numero uno in India, as per some reports, had fallen off the pace.
Rahul ponders this. Or rather does not. It is more as if he is trying to figure out where to start. He then answers:
“Why we are silent…that is something which we need to talk about. So, last year – 2016 – was a year which I can say was a very very eventful year.”
Two “very”s, I interrupt. That eventful?
He laughs and continues, “A lot of things happened last year. I think the way the phones used to be sold and the way they were perceived, changed dramatically last year. For example, a product a product which was being sold at Rs. 25,000-35,000 started selling at Rs. 12,000. And on the other hand, our other friends started coming up from China, started bombarding and started spending money left, right and center, So, there was an insane amount of money which they wanted to plow into the market, from one side, which is a very different way of doing business. On the other side, there were these different online guys selling devices with 8976 chips (the Snapdragon 652) at Rs. 12000, unheard-of pricing. Of course, for one the acquisition cost of customers was very high, and the others, they were not making much money on their phones.”
He pauses, collecting his thoughts, long fingers interlocking. “So, in the first half (of 2016) we were okay. In the second half, we said ‘you know, let’s take a step back.’” He sees our eyebrows rise at this. I mean, Micromax was the brand that was known to be confrontationist. Nuts, guts, glory and all. A step back? He raises a hand for patience, and explains:
“There were two ways. One can either start running in the same rut as these guys, or you take a step back and you analyze what is happening and what is not happening. See, we could also provide an 8976 chip device at Rs. 12,000, but did we want to do that? Is that the way forward for long-term? As Micromax, we are long-term players. We are a marathon runner, not a sprinter where we say ‘100 meters done! Thank you.’ So we decided ‘okay, let the dust settle.”
But wouldn’t this mean being seen as inactive? He acknowledges this with a nod. “So okay, we thought if we are not participating, then we are doing what?” He proceeds to answer his own query.
In investment mode
“We are investing in our infrastructure. We will get stronger from the inside rather than do something outside. We started investing in a lot of start-ups and we started investing in infrastructure. We already have created very large facilities which we think we are the only ones in India to have those facilities in terms of manufacturing. I’ll show you some pictures of the new factory we inaugurated…”
He unlocks his phone. Which of course makes us both lean over to look at the phone itself – a model that had never been on the market! Before we can say anything, he quickly says “No, no pictures OF this phone. You can see pictures on this phone right now. We will talk about this phone some other day…”
He then shows us pictures of some structures. “These are large infrastructures rather than some small factories,” he explains. “We have seen other players saying ‘we are also putting up factories,’ but those are built up on 1000 sq feet of land. The factories that we have been putting up are as large as in 25-acre plants, state-of-the-art factories and all.”
He looks at the pictures and then mutters, “I think we should tweet these,” and then sensing, rather than actually hearing the weary sigh of frustration from his comms team, smiles apologetically, “I know, I know. I totally forget that I am on Twitter.” He might have married a very high-profile Bollywood actor, but Rahul Sharma tends to stay quiet – but it is a silence that suits him more than his company.
The photos shown, he returns to the subject of perceived inactivity. “So that was one part in terms of our infrastructure. Second, also in terms of our servicing. You know, we have never been known for servicing. We invested heavily in terms of that. Our open calls which used to be 1,37,000 came down to around 25,000. If you ask our channel, in terms of services, ‘how is the servicing of Micromax?’ everybody will give you a thumbs up.”
He settles back in the chair. “So, now in terms of infrastructure, we are quite solid now. Now the only thing that we have to do is come up with some really cool products, really great products, get into the market and gain more and more market share,” he says.
But where are the products?
Of course, that brings us right back to the absence of Micromax phones from the market. “So, we said ‘okay, we will plan the whole thing after Diwali (the Indian festival of light which was celebrated on October 30, 2016)’ and we will launch some new products. And we will get into the market because we thought, by then the position will be clear.” He smiles, “I think now, as we have seen the whole situation, I think right it is quite evident and clear who is going to stay and who is not going to stay…
“So if you see a complete player, I still feel only Samsung is a complete player out there because there are some players who are online or are only playing in two price brackets, which are, Rs. 9,000 and Rs. 12,000. Their products above Rs. 15,000 do not sell. And if you see Oppo, Vivo and all, there are all playing in Rs. 10,000–20,000 bracket. So they don’t have products in the less than Rs. 10,000 bracket and they even don’t have feature phones. So I am saying that the only end-to-end player is Samsung which has feature phones also and phones like Z2 or Z1 and other products. I’ll feel as a complete player, Micromax will be there competing…”
But what about the planned launch of devices around November, we remind him. He shakes his head and continues with a wry grin.
“After doing whatever we have done, we thought we would launch some products in November, but then in November, markets got disrupted because of demonetization. I think being an Indian vendor we think we were one of those who was hardest hit because while high-end phones were selling through financing, but we got a massive dent when it comes to the complete range. After that, we did not have a clear idea when things will get back to normal. Actually, we think no one really knew. But now, we have seen signs that the markets are coming back. So I think now is the time when we will be coming back, after creating this whole infrastructure.”
But was not this a rather long period of near hibernation for a brand that was known for high-profile launches and aggressive marketing? Rahul nods and reiterates his points in favor of taking a step back.
“We had two different options. We could have either participated in the same league where we could have bought Bigg Boss, Koffee With Karan or Yaadon ki Baraat, like these other companies that have bought everything. See, that is why there customer acquisition cost is very high. Or if we have to go a different route, we will say okay, this is one product with a good chipset for Rs. 11,000 and let’s go out in the market. Right? And normally we react very fast but this time we just took a step back because there was too much happening actually in the market. And then Reliance (Jio) came in, the whole market overnight changed from 3G to 4G,” he finishes with just a touch of weariness, and adds, “Demonetization, all these players coming in, there were too many things happening.”
The importance of saying ‘No’…sometimes
But given Micromax’s reputation for speed and innovation, wasn’t the decision to stay relatively quiet out of character. The answer is near philosophical.
“We took that step back and internally we decided to not participate in this,” he says. “See, sometimes in life, you have to say ‘No’ also. Saying ‘Yes’ every time is not possible. Sometimes we should also say ‘No.’”
He chews that mentally for a while, almost in a world of his own and then returns to the point.
“So we said okay. Let’s not invest money in that direction because sometimes, in the process of let me also do this, let me also do that, let me show what can we do – and you know we have done that for quite a while in the last couple of years – things can go wrong. So, this time we consciously stepped back. As I said, we are a long term player and I know the situation of some of the players in the market. And it is not that great,” he smiles wryly again, but then moves on. “I think now we are absolutely ready to get back into the markets and by the middle of March you will see…” he breaks off to think and then laughs. “Actually now, we have too many products. The products which were supposed to get launched in November even those are ready.”
“You will see a lot of fireworks in March”
The laugh breaks the rather serious tone of the conversation. We ask him how he handles criticism of the company – and there has been a lot of it in the past few months, with some even claiming it was on the verge of shutting down.
He shakes his head. “In terms of how do I handle this… of course, it is something which is not pleasant to your ears and your eyes. But sometimes as I said, you have to be calm and patient. I watched a film last night – a story of a man who has to give money to a don at 5 in the morning and he does not have the money. He also has to give money to his brother-in-law because he is not treating his sister right. As 5 am comes closer, he feels like he is dead, but by 6 am, he is rich as a king.” He pauses once again, remembering the film (the highly acclaimed “Neram,” which was released in Tamil and Malayalam in 2013), and then continues: “So, you have to take all these things with a pinch of salt. It is like if you have taken a conscious decision that okay you are not going to participate then you have to learn to live with it for some time.”
But it is clear that the time for living with the decision is now coming to an end. “March is the time when we will attack the markets,” he says. “So you will see a lot of fireworks because we will be unleashing all the products and we will be coming with a lot of promises for our consumers. Because as I said, infrastructure wise we are very solid. So, coming up with different products in the markets and differentiating the products from the competition, we will be doing all those things. Earlier we used to disrupt on pricing. If somebody launched a product is this price band, we usually used to disrupt it by the next day. Right now there are two different strategies. Oppo and Vivo are not playing on price disruption strategy while the online players are doing the price disruption thing. I have to change my stance. I have to change my strategy. I cannot adopt a strategy similar to what we used vis-a-vis to Samsung or others at that time. Times have changed. The way of working has changed. And we also have to change.”
But what of Micromax’s sister brand, Yu, which also has been relatively quiet after a very promising start? Will things change on that front as well, and is there any truth to the rumors that the brand itself might fade out, we ask?
Rahul winces at the idea of Yu fading away (it is seen in many quarters as being mainly his baby) but does concede there will be changes “In 2017, you will see, say a relaunch of Yu. There will be a couple of products that we will be coming up but Yu will be coming with some disruptive product strategy. Because that is the DNA of Yu. Yu goes and disrupts the markets. So with Yu we will be disrupting.”
The brand will also continue to remain an online-only one. “In the middle, we tried to move Yu offline, but Yu will be coming up online. In fact, we have just concluded a meeting about which partner to go with and so on. There will be a new version of UI on that (Android on Steroids) and Around Yu will be there as well.” The second coming of Yu will also be in the month in which Rahul has promised firecrackers. March.
“In 2017, you will see a very fierce Micromax back into the market. Because we have never been so quiet,” he promises. “We will also be moving to higher price segments, where we have normally not been very present.” A premium product, we ask. “Why not,” he replies. “When we started, we were nobody. At that time, we could not even sell a Rs 1000 phone. So if we can do that, we can do this also. It is a challenge, I know. But without a challenge there is no fun, is there? The fastest growing market is the Rs 10,000-20,000 market and earlier we were not participating in that. Now you will now see more and more products.”
Not just phones: becoming a “complete evolved player”
Micromax’s silence in the phone segment has led to its other products getting noticed, though. Such as televisions. “You will see Micromax as a complete evolved player,” says Rahul. “Because our brand is very strong. Once you have a strong brand with you there are two ways of doing things. You can say: I know how to make great phones so let me just make phones and sell in Indian markets and other markets which we were doing for last few years. And as we have a strong brand, we thought: can we also move horizontally in different segments? We said ‘yes, let’s try in TVs.’ And it was quite successful actually more than successful. I think we are already in top five in India. So we thought why should we not leverage the brand in different segments? Which is why we said yes and let’s became a complete 360-degree consumer electronics company.”
And these are not likely to be disparate products either. From televisions to air conditioners to other devices, there will be a common thread running through the Micromax brand in terms of connectivity. “Most of our products will be connected,” Rahul stresses. “Our TVs and phones are already connected. In times to come, air conditioners or whatever products we are going to launch will be connected. The phone is a primary device to connect multiple things.”
And what of wearables, into which Micromax had dipped its toes (and burned them a fair bit too) with a fitness band under the Yu branding? Although not over-optimistic about the current state of the wearables market (“I have not seen a great market for wearables recently“), something “really really crazy” in the coming days. “We still have our investment in Healthify,” he points out. “This year, you will see a couple products around wearables.” Again in March, we ask? But this time the Micromax CEO is not willing to pin down a month.
All roads lead to…March
As we wind up, we switch to a more informal topic. How has the marriage to one of Bollywood’s most famous actresses affected him? “Marriage has changed me for the good,” he says, not willing (as always) to speak of matters personal. “I have become a better person in many ways.” He smiles and adds, “I have learned to take pictures. So I have become a better cameraman or photographer, you can say.”
And what does he do when not in Micromax mode? “Catch up on a movie at home or play cricket at home or play any other sport at home or at friend’s place,” he says. “I can play most games. I have been pretty sporty since my childhood. So if you ask me to play badminton, I can play decent badminton – I have represented my school and college in badminton. In most of the sports actually. I have never attended the prayer in school because they used to ask the sports kids to practice at that time.”
And then as he walks us through the door, he turns to Akriti and says, “Tell your mom she will see new phones from us soon…”
It might have had a very quiet second half of 2016, and been silent so far in 2017, but come March, that could change for Micromax. And for the competition too, which will be keeping a wary eye on India’s leading smartphone brand.
That table of Rahul Sharma still has a lot of phones. Yes, the Indian market has changed and there are a number of newer players to deal with, complete with new strategies and approaches. But this then is a company that managed to see off challenges from the likes of HTC, Sony, LG and yes, even Nokia. So yes, the competition would do well to keep its eyes and ears open for a “very fierce Micromax.”
If they don’t, well, remember what the Ides of March did to a certain Julius Caesar?