Hunting with the hounds

Rahul Sharma has built audacity into Micromax. He wants to take on the might of Xiaomi, Samsung and even Google, in the smartphone market

Rohin Dharmakumar

(Picture of Rahul Sharma by Pradeep Gaur / Mint)

Listen to Rohin Dharmakumar in conversation with Rahul Sharma

On September 15, 2014, Sundar Pichai, arguably the second most important Google executive today after chief executive Larry Page, launched the first of Google's Android One smartphones in India.

Affordably-priced, featuring reasonably good specifications and running unmodified "stock" Android operating system, the new range of phones was described by the media as "Google's push to rule the smartphone world" in emerging markets. The "pure" and "unadulterated" Android experience was meant to be the clincher.

Yet, in India-easily Google's most promising market globally (the US is dominated by Apple and in China Google's services are banned)-Android One has come a cropper. It even featured ignominiously in 2014 year-end 'flop' compilations in the press.

Google though maintains that Android One isn't a failure. "We've been very happy with the success of Android One in the last several months, which we see in both high consumer demand and excellent customer reviews," said Caesar Sengupta, its vice-president who is responsible for Android, through an emailed statement.

"Android One was the belated bear-hug of the Android ecosystem," says Shiv Putcha, an analyst with IDC's Asia-Pacific Consumer Mobility team. "Android is a means to an end for Google. They want people to use Google's services on mobile. But anything that potentially disaggregates them is a threat," he adds.

The threat Putcha refers to came ironically from within the same Android ecosystem Google was now seeking to defend.

Sundar Pichai of Google

Sundar Pichai, Senior V.P at Google in-charge of Android, Chrome and Google Apps  


IT'S NOT YOU…

Of the three Indian phone makers Google chose to release Android One devices in September, the largest was Micromax. Aggressive, innovative and fast-moving, it has repeatedly confounded sceptics by going from selling its first phone in 2008 to becoming the second largest smartphone company in India (or perhaps even the largest, depending on which analyst firm one asks) and the 10th largest in the world. According to IDC's November 2014 estimates, Micromax lagged market leader Samsung's share by just 4 percentage points in the overall mobile phone market and 2 percentage points in the smartphone market.

Perhaps Google thought it was co-opting Micromax by partnering it for Android One. But Micromax had realised some time ago that it had no future in being a commoditised and undifferentiated Android partner.

Thus in September, even as Pichai was launching Android One, Micromax was well over six months into a yet-undisclosed secret partnership called Project Yureka with California-headquartered Cyanogen, the makers of the modified Android variant called CyanogenMod (now called Cyanogen OS).

"In early 2014 we had realised the market was moving away from hardware specs to software and services. Samsung once had the best of screens, memory or processors, but now there was no difference between their hardware and ours. Sure, we were doing well month on month, quarter on quarter, and could've just kept on doing what we were doing and felt good. But after two-three years, then what?" says Rahul Sharma, Micromax's affable and dapper co-founder.

Founded in 2000 by Sharma and three of his friends, Micromax has over the years raised over $50 million in venture capital and has "professionalized" itself-an Indian euphemism for bringing on board experienced senior professionals as entrepreneur-founded (and often VC-funded) companies grow. The co-founders have today ceded operational responsibilities to senior executives hired from outside, like chairman Sanjay Kapoor (former Airtel CEO) and CEO Vineet Taneja (former India head of Samsung Mobiles), while themselves focusing on strategy and partnerships.

Of the four founders, Sharma is both the face of Micromax (the way Lei Jun was Xiaomi's or the late Steve Jobs, Apple's) and the person clearly driving its long-term strategy.

"Nokia and BlackBerry were once leaders, but look at them today. HTC was once promising, but is struggling now. And while Samsung may still have global market share, nobody today is optimistic about their future. This is what happens when you cannot differentiate yourself. 'Good enough' is just not good enough in our industry," says Sharma.

The smartphone market is lucrative, with nearly 1.5 billion smartphones likely to be sold in 2015 and an annual growth of nearly 25 percent. Unlike PCs, the last great technology adoption story, people replace their phones every few years. It is also unforgivingly ruthless, with innovation and commoditisation measured in months and quarters, instead of the years it took in the PC industry.

The result: a radioactive half-life for phone brands as technology and consumer choices evolve rapidly, in the process squeezing already wafer-thin profit margins even more.

"Smartphone chipsets today are from Qualcomm and the operating system from Google. All the data goes straight to Google. What do we have? Even small things like when I am typing an SMS, why does an incoming call take up the whole screen? I can't even control those. But why should it be like that? That's when we realized we need to take control of our software and not send our customers to Google," says Sharma.

Cyanogen

…IT'S YU

India has dozens, perhaps hundreds of phone brands that compete for a slice of its large and growing market of nearly 300 million phones annually. On December 18, that list grew by one more as YU, yet another brand, launched its first phone at a press conference in Delhi. On the face of it, the phone, called Yureka, looked not very different from most of its competitors with its dual-SIM support, large 5.5-inch display and dual high-resolution cameras. Its price too was fairly middle-road, at Rs 8,999 (about $140).

A closer examination revealed more powerful specifications such as a 64-bit eight-core processor from Qualcomm and 4G-capability, which are unusual at that low a price. But perhaps the most important feature about Yureka was its software. Though based on Google's Android, it ran Cyanogen OS atop it.

Cyanogen OS is a pseudo-operating system. Running atop Android, it allows users to customise or extend Android in ways Google never intended or wanted. Though many such aftermarket firmware exist, Cyanogen is easily the most popular globally alongside China's MIUI (made by Xiaomi, also based on Android).

Though Cyanogen and MIUI can be freely downloaded and installed on most popular Android smartphones, it was a step hitherto attempted only by couldn't-care-less youngsters and DIY geeks. One big reason was the complexity and risk in installing it (one error or misstep could "brick" your phone), but the bigger one was that installing a custom firmware would void most smartphone warranties.

Yet surprisingly, YU's chief executive reassured potential buyers his company would not only honour their warranties, they wanted the users to modify their phone software. "You are the master, you control your destiny, you create the software. We'll put it on your devices," he said.

Coincidentally, the executive was Rahul Sharma.

After figuring that selling Android phones was a slow walk to commoditisation, Sharma had explored various options to escape the trap. "We considered making our own ROM (firmware variant of existing OSes) but calculated that it would take us four years, even after which we might not be as good as Cyanogen," says Sharma.

As it happened, around that time one of Micromax's venture investors connected Sharma to Kirt McMaster, the chief executive of Cyanogen, to explore potential synergies in working together.

"We met at a café in Palo Alto and had a brief chat, then followed it up with a more detailed one over Skype later. For our next meeting Kirt came down to India. He had already extrapolated our sales and growth numbers for the next five years to visualise the potential. We were really impressed to see someone sharing our hunger and closed the deal instantly," says Sharma.

McMaster was present at the YU press conference via webcast, together with co-founder Steve Kondik. "There's a battle being fought in India, and as Cyanogen+YU, we intend to win that battle," he said.

Is market-leader Samsung their adversary in this battle? Unlikely.

"We're just 4 percent behind Samsung in the smartphone market and 1 percent in the overall phone market. 200 percent we'll catch up with them. But that's an offline story," says Sharma.

Who then is his new, online opponent? YU's strategy offers clues.

"YU will be a global brand, first launched in India. While Micromax releases over 50 phone models every year, YU will only have a limited number of models targeted at power users. Distribution will be purely online," says Sharma.

Almost every element in that playbook-the customised OS, powerful specs at low prices, targeting power users and online-only distribution-is taken from the company that's Micromax's potential nemesis in India: Xiaomi.


XIAOMI RISING

The year 2014 was when Xiaomi became China's largest smartphone vendor, beating Samsung. It was also the year it entered India, the world's fastest growing smartphone market.

Like in China, it attempted to change the rules of the smartphone selling game to the ones it devised. The most notable of these was the "flash sales" model under which the company sells small batches of its products periodically through online sales that customers must register for. In India Xiaomi's partner for these sales was Flipkart.

Most of these sales last mere seconds (2, 4 and 6 were the officially communicated durations for three of these sales, in seconds) and leave many more disappointed users than happy ones. And yet, this seemingly counter-intuitive tactic helps Xiaomi in multiple ways.

Each event creates its own PR and marketing, as disappointed users from previous rounds and new ones sign up in the hope of "winning" a phone they're really only purchasing. This obviates the need to spend money on expensive advertising or marketing campaigns.

Asking people to first sign up in order to buy their products and then participate in periodic "draws" gives Xiaomi two valuable lead indicators to estimate demand for its products-registered demand and confirmed pre-purchases. Using these, it can tweak its manufacturing strategy while other competitors rely on gut or unreliable market research.

In a race-to-the-bottom market where players fight each other with better features or lower prices, Xiaomi's flash sales also reframe a potential customer's choice as "Will I get to buy Xiaomi or not?" which earlier might have been "Should I buy a Xiaomi or another brand?"

Selling online allows Xiaomi to save a large chunk of the costs smartphone makers incur in distribution and in providing a profit margin to the retailers who sell their products. Xiaomi can thus reinvest these savings into expansion or R&D, or into selling its products at far lower prices than the competition.

Take the Mi 4, Xiaomi's most recent flagship device (on January 15 it announced two new phones-the Mi Note and Mi Note Pro-both of which at the time of writing were as yet unavailable for purchase). When launched in August 2014 it sported cutting-edge specs including a screen with a higher resolution than the latest Apple iPhone at that time, a powerful Qualcomm Snapdragon chipset and dual high-resolution cameras, all packed into a composite aluminium body. The price? Around $325 when Samsung and Apple's flagship models were priced between $700-800.

But there's a catch-the Mi 4 went on sale in India only on January 28, a full six months after it was launched in China, even as it continues to sell the Mi 3 which was launched in September 2013. Here's where another one of Xiaomi's tactics comes into play: by announcing a cutting-edge flagship phone at cut-throat prices, it creates a "halo effect" around itself which bathes even lesser-equipped phones that are more readily available in its glow.

Xiaomi also ekes out progressively greater profit margins on its phones by drip-selling the same model over an extended period of time. In the tech industry and particularly in the smartphone one, price drops for components are measured in weeks and months. This means Xiaomi's profits on a phone continue to rise the longer it continues to sell them after launch.

Adapting this playbook to India allowed Xiaomi to sell 1 million phones in 2014, by its own admission. That's an insignificant number next to the 61 million it sold globally, but mostly in China.

And yet, Xiaomi's investors (who most recently gave it $1.1 billion at a valuation of $45 billion) will be looking at its success in India during 2015 the most.


BATTLEGROUND: INDIA

In 2010 India inadvertently became a turning point in the fierce war between the Wimax and LTE camps to become the de-facto global 4G standard. Chip-making giant Qualcomm spent $1 billion to buy and earmark valuable chunks of spectrum on auction from the Indian government for LTE, thereby shutting out rival Intel's Wimax from contention. Given China's earlier decision to go with LTE too, Wimax didn't stand a chance after losing the world's second most populous telecom market too.

In 2015 India is again going to be a crucial battleground for yet another high-stakes battle, between Micromax and Xiaomi.

Xiaomi is already the largest smartphone seller in China. It will of course try to grow its market share as the leader, but with nearly 80 percent of mobile phone users having already upgraded themselves to smartphones, the overall market is slowing down. According to IDC Chinese smartphone shipments in the third quarter of 2014 were up just 1 percent over the preceding one.

Meanwhile, the Indian smartphone market grew at 27 percent during the same quarter even as nearly 70 percent of phone users are yet to upgrade to smartphones.

"I don't think that it makes sense for us to move our nucleus of attention from India to any other market for quite some time," said Hugo Barra, Xiaomi's vice-president and head of international operations (and a former Google vice-president in charge of Android) in a recent interview to Ben Thompson who runs the member-only technology newsletter Stratechery.

India is also a test-case for Xiaomi to prove to sceptics and investors that its growth thus far isn't because of uniquely Chinese factors.

In China Xiaomi is a cult brand, not unlike the way Apple is in the US (and elsewhere too, to varying degrees). Its co-founder and CEO Lei Jun is treated to adulation worthy of the late Steve Jobs, at least part of which is attributable to his decision to emulate some of Jobs's and Apple's idiosyncrasies and designs.

Mi.com, Xiaomi's website, sells over a 1,000 products and is China's third largest online seller.

The app store on its phones sold in China is its own, not Google's. A multitude of cloud services on its phones lets users store and share their photos, messages and contacts.

It is able to market itself through ubiquitous social platforms like WeChat and Weibo to a legion of young fans. With a slogan "Only for fans", Xiaomi engages closely with young fans using deals, tailored software updates based on their feedback and cheap smartphones.

In some ways, Xiaomi's decision to sell its smartphones cheap to its fans can be compared to Gillette's decision to sell its blade handles cheap in order to sell more profitable razor blades over a lifetime.

The 'razor blades' Xiaomi wants to sell are a fast expanding list including wireless routers, smart TVs, smart air purifiers, fitness bands, blood pressure monitors and lightbulbs.

All these devices aren't necessarily made by Xiaomi, in fact most of them are likely to be not. But they're still part of a loose ecosystem that Xiaomi wants to tie together through venture investments and software linkages.

Xiaomi has invested hundreds of millions of dollars in Chinese companies ranging from appliance making (Midea) to video sharing (YoukuTudou, IQiyi) to wearables (Misfit, iHealth) to gaming (Kingsoft) to assemble a formidable alliance of products and services that will cooperate within a Xiaomi-controlled smart home.

In this larger order of things, a smartphone is just a wedge into a young (18-30 is the major demographic) customer's wallet and home. The real revenue lies in selling a multitude of Xiaomi 'razor blades' over the years.

But much of this playbook won't be available to Xiaomi in India.

Samsung Pavillion


XIAOMI BECOMES SAMSUNG?

Indian consumers, by and large and across product categories, gravitate towards lower prices and more features instead of passionate brand loyalty. So as Xiaomi replicates its "only for fans" strategy, the likelihood of Indian users reciprocating with their wallets and loyalties is likely to be significantly lower than in China.

Outside China, Xiaomi will also be faced with numerous legal, regulatory and media questions around its origin and products.

In December it was forced to temporarily halt sales of its products following a court order based on a patent infringement case with Ericsson. Though Xiaomi was able to resume sales following an interim royalty payment, it should expect more such challenges from other large patent holders who are powerless in China. It must be pointed out that Ericsson has also targeted other manufacturers like Micromax, Gionee and Intex.

Xiaomi's Chinese origins, including those of its cloud servers that store all the data and logs of its users, will also face challenges from both competitors and regulators. In August it was hastily forced to make some of its cloud services optional after a critical report from security firm F-Secure showed how user data like phone numbers, text messages and contacts were being uploaded sans permission or warning to Xiaomi's servers in China. The Indian Air Force ended up warning its officers and their families against using Xiaomi's products for the same reason.

Faced with its Chinese origin being suspect, Xiaomi subsequently also said it would move its services for international users to Amazon's servers.

Xiaomi has announced its plans to set up a manufacturing facility in India over the next 18 months.

And what of its famed flash-sales model? Well, that too isn't the Holy Grail in India as it is in China. Xiaomi is partnering Airtel, India's largest mobile operator, to start stocking and selling its phones through the latter's company stores.

But as it compromises the very qualities that made it successful in China, could Xiaomi become yet another global conglomerate, like Samsung?

"A couple of years ago Huawei and ZTE were seen as big threats based on their fairly big push into emerging markets on the back of their networking businesses. But they too were overtaken by the rise, and rise, of Samsung. It's not a strategic game anymore but a tactical one. Sales support; distribution games-how do I exclude others?; marketing support for local services like SIM cards, payment methods and financing; pricing wars; and politics, which took out Huawei in the US, are what it takes," says Horace Dediu, a telecom and technology analyst at Asymco.

That is why, says Dediu, large local players exist in not just China and India, but Vietnam, Japan, Korea, Indonesia and most large non-Western markets.

"I think Xiaomi and other regional brands will have difficulty expanding outside their core markets because local brands can move quickly to replicate its benefits," says Dediu.

From its youth-targeted messaging to online-only flash sales model to unprecedented customisability of the operating system, Micromax's new brand YU is exactly that.

It is reported to be considering reviving a pending initial public offer (IPO) in order to raise $500 million, to fund a war chest to take on well-funded Xiaomi. Though he doesn't offer specifics, Sharma says Micromax is deep at work creating an ecosystem of its own, comprising independent developers and services to begin with.

But taking on a juggernaut like Xiaomi will take more than just that, which is where YU's partnership with Cyanogen comes in.

"Xiaomi will have a hard time in India because it doesn't get marketing or distribution like Micromax does," says Cyanogen CEO McMaster.

It is a high stakes battle. "YU plus Cyanogen will be the Xiaomi of India. There's no question about that," he adds.


DRAGONSLAYERS

The partnership between Micromax and Cyanogen in India is an interesting one because while their common enemy is Xiaomi, they're also taking aim at Google's Android.

"In the early days of Android it was like the Apple iOS experience, only cheap and open. No wonder it took off. But now that it's everywhere and for the first time people are getting near-flagship specs in phones at affordable prices, they don't want a stock experience but a differentiated experience," says IDC's Putcha.

"If an alien came to earth today and you gave it an Android and iOS device and did the Coke-vs-Pepsi test, it wouldn't be able to tell the difference. Stock Android and iOS are just shells today for deeply integrated Google and Apple services. We believe there's a whole level of mobile evolution that goes beyond this," says McMaster.

"Evolution" would mean features that Google hasn't brought to Android, or probably doesn't want to either.

A striking example would be Google's inadvertent release in 2013 of App Ops, a feature that enables users to allow or deny privacy permissions to apps on a granular basis. Instead of having no option but to allow all the privacy permissions an app asked for at the time of installation, users could choose to deny or allow specific requests. Google removed the feature with the Kitkat update to Android, claiming the feature was "experimental" and could break app functionality. The same feature exists today as one of Cyanogen's most popular ones, "Privacy Guard".

But modifying Android to create their own custom version isn't something any company can do, as failed attempts from the likes of HTC, Samsung and even Amazon have shown.

"Mobile system software is no longer a differentiator but the layers above it where services reside can be. This is where Cyanogen is an interesting player, not just because they're well-funded and aggressive. But because of their strategy of taking out what was always meant to be open-source (the Android Open Source Project, or AOSP, is the core of Google's Android OS and is freely available for anyone to modify or use) and turn it into a white-labelled offering," says Horace Dediu.

This enables YU to create a 'bespoke' version of Android and add in the services, branding, media and interaction features they want. This could include messaging options beyond Google and Facebook; movies and songs priced independently from other stores; and even app stores (allowing it to potentially capture 30 percent of the value of apps it sells).

"A local OEM [original equipment manufacturer] with its own app store could give a bigger revenue share to operators and can even change developer economics. Globally apps are already a $20 billion business, bigger than music sales and might overtake movie sales soon too. Apps are the tail that wags the dog. That implies profits will accrue there," says Dediu.

Micromax's Sharma offers a glimpse of his vision: "If I'm listening to an AR Rahman song, why should I not get more options to buy it? Why do movie releases have to be limited to just 4,000 theatre screens when I have millions of screens? If I want to dial a plumber, my contact book should tell me if my friend knows one already. And why can't I become like a Flipkart or Snapdeal by offering comparison shopping? Monday nights you may be able to buy air tickets at Rs.1; Tuesday nights could be disco-themed promotions; Wednesdays could be ladies-special nights etc. We want to seamlessly integrate these experiences, like butter, into our phones."

The value of these features lies in them being exclusive, so YU can claim features which none of its cheaper or better-equipped Android competitors can match.

"Differentiation will happen above the system layer, the way Apple offers its own services like iCloud, iTunes, iWork, iMessage, etc. Xiaomi copies Apple in its business model and understands that great brands are born by solving problems for their end users. Samsung does not have this understanding. They are a giant conglomerate and multi-channel distributor. Google dictates their user experience and solves user problems too while Samsung only implements the solution," says Dediu.

"The moment you start controlling an ecosystem, what happens to the rest? Everyone says big data will become important but that's if you have the data. We OEMs don't get stock data all," says Sharma.

An understanding of the high stakes involved and the criticality of exclusivity can be got by Micromax's exclusive partnership with Cyanogen in India. OnePlus, a young Chinese brand known for its Cyanogen-powered high-end phones, realised this the hard way when Cyanogen abruptly switched off its partnership for the Indian market. A lot of Android users, including OnePlus fans, were up in arms at Cyanogen's decision.

"OnePlus has been a great partner and we'll support them globally, but for an 80-people Palo Alto-based company like us, Micromax was the best partner because it knows the fastest-growing market in the world better than anyone," says McMaster.

Its partnership with Micromax in India is also a template Cyanogen wants to replicate around the world. "We see Xiaomi's attempts in India and to go to other countries around the world. Our intention isn't to stop with India either, but to go to many countries by partnering local players like Micromax," says McMaster.

It's also clear McMaster is aiming against two global adversaries.

"Samsung and HTC are not great software companies. We don't think Xiaomi is great either, because even their MIUI was (originally) built atop Cyanogen. We don't have a legacy, we don't carry inventory and we don't make radiators. We have 50 million users globally, and if you aggregate our China users, 95 million. MIUI has 72 million. We support 250-plus devices in 90-plus countries, while they support 4 devices in a few countries. And we're doing all of this with just over 80 employees and $30 million in funding so far compared to their 3,000 plus and  they've raised nearly $1.5 billion. Shows how you can do much more damage when you're a pure-play software company," says McMaster.

Cyanogen's model of becoming the software platform of choice for leading local players in countries around the world, like with Micromax in India, is an audacious move. It wants to allow these partners to create deeper integrations between the phone, apps and services that are not possible with stock Android.

"The kinds of things we're going to be doing with Micromax is not self-evident today but will become apparent over the next 12 months. There will be new services and new devices that will be dragonslayers," says McMaster.

"Xiaomi will need to adapt their stack-a blend of hardware with a very slick integrated offering-globally. In comparison, Cyanogen is more modular, thus allowing more companies to integrate and specialise with it. It's possible that Micromax is complying by Clayton Christenson's theory of disruption by attacking Xiaomi's integrated offerings using a mix of Google, Cyanogen and its own local offerings. If they execute well then in about five years at most the Xiaomi model may not be dominant globally but the Micromax-Google-Cyanogen one," says Dediu.

While it's worth noting Dediu includes Google in the modular triumvirate that might trip up Xiaomi globally, its value may be diminished.

"We'll be 200-plus people by 2015 and sometime within the next two to two-and-a-half years as big as Google's (Android) OS team. We're building a full blown OS and not just a ROM. We already control everything from apps to the kernel layer and we will do more than even Google when it comes to kernel too. In five years, when you look at Apple, Android and Cyanogen-there will be a huge difference. We will be hugely different," says McMaster.

If Cyanogen can pull off its gambit, Google could be left in a very tight spot. Though free and based on open-source, Android is a critical platform for Google to get its services like Search and Maps in front of global users.

Take its status as the default search engine on iOS devices, a privilege for which it reportedly pays rival Apple nearly $1 billion annually. In return it is estimated to make nearly $3 billion in revenue through search ads. If Google's deal with Apple were to collapse, the impact on its share price could be as much as 7 percent as per a recent research analysis from Nomura.

And as Google's revenue from search slows down (it missed a profit estimate in October on the basis of slowing advertising growth), it needs Android to funnel millions of new smartphone users into its ecosystem of services. In its search for newer sources of revenue, it will end up competing with its Android partners.

"Does a Micromax compete with Samsung and Xiaomi, or Google which wants to capture all the profits? Like how HP realised the 'Win-tel' duo (Microsoft Windows and Intel) absorbed all the profits in the PC space, mobile OEMs may realise that maybe Mediatek, ARM, Qualcomm and Google are capturing most of the value," points out Dediu.

"Google is oriented around services and is not a systems software company. It still built Android because it didn't want to be shut off from the plumbing built by someone else. But now with Cyanogen they're faced with a player who says, 'We'll take your plumbing but we'll still add someone else's search to it'," says Dediu.

"What if people don't mind using Bing Search (instead of Google Search)? All of Google's services, including Gmail, could be then threatened. The battle between Xiaomi and YU will therefore decide-do you even need stock Android anymore?" says IDC's Putcha.

This isn't mere hypothesising, as evidenced from Cyanogen's own ambitions.

"With less than a 2 percent share, Apple is not going to get any meaningful penetration in India. That being said, they have great services like Siri, iTunes, iCloud, etc. We could enable Apple services to work on the Android platform. Instead of Google Now on Android you could use Siri and instead of Google Play you could use iTunes. I'm using Apple here as an example but you can draw parallels," says McMaster.

Cyanogen recently announced that it is including Boxer, an email app whose premium version costs $14.99, as the default email app for all Cyanogen OS devices coming out after a few months. It also partnered Qualcomm at the Mobile World Congress in Barcelona to ensure Cyanogen OS would run natively on smartphone chipsets powered by the former's Snapdragon processors. Closer to India, the Economic Times reported that Wipro chairman Azim Premji's family office, PremjiInvest, was likely to be part of a $110 million funding round in Cyanogen.

In case those actions weren't clear enough, McMaster declared at another industry conference: "We're attempting to take Android away from Google."

In response, Google emailed a statement from Caesar Sengupta, saying "Android continues to be an open ecosystem. Carriers, OEMs and others are free to customize Android and include their own offerings on devices. Of course, if an OEM wants to provide their users with access to Google's digital content offerings in a simple, consistent way, they can do so with Google Play."

Xiaomi refused to comment for this story, citing official policy of not being part of stories involving competitors. Yet, Barra obliquely referenced Micromax in his interview with Stratechery's Thompson, saying, "I think there are established competitors like Samsung and the new guys - all these guys are bringing so many products so quickly and they're responding very fast to how we work and how we operate. There seems to be a trend now-these guys realising that in order for them to sell online at aggressive prices they have no choice but to create a new family of products or a new brand."

Note, Barra mentions only Samsung by name and not Micromax. This refusal to acknowledge Micromax as a valid competitor has been a common tactic across all of its major competitors-Nokia, BlackBerry, Samsung, and now Xiaomi. In 2013 when a Samsung spokesperson said they did not consider Micromax a competitor, Sharma referred to a quote from Mahatma Gandhi: "First they ignore you, then they ridicule you, then they fight you, and then you win."

Sharma doesn't appear perturbed today either that Xiaomi doesn't consider Micromax its competitor in India. He says his ambition is to become the world's fifth largest phone maker in the next two years, and much more thereafter.

"The whole world is moving towards connected devices. We want to make shirts that say 'Wash me!'; shoes that count calories burnt and give directions; health bands that nudge you to eat better; and audio headsets that start playing your favourite music when you wear them. We want to create the largest ecosystem in the world," says Sharma.

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Comments

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Sulabh Gupta on Mar 20, 2015 10:07 a.m. said

The only thing that Google has to do is not give Micromax or Cyanogen access to Google Play and your entire dream is going to go away. Google understands all of this and they are creating more and more dependencies for users and OEMs on Google Play services.

Hash R on Mar 19, 2015 4:30 a.m. said

Brilliantly researched & well rounded story telling.

As a consumer & mobile phone user since 2000, I realised a year ago that :
...ALL current mobiles have a use-life of not more than 2 years (Built-in Obsolescence of Hard&Software)
...that is irrespective of the brand name (yes, the vague names last less)
...a brand like Micromax @ 10-12K price bracket, gives me the same features & longevity as a Samsung @ 20k price
...I took the risk, put my trust into an "Indian" brand called Micromax ... and have not been disappointed
...I have converted atleast 20 of my family & friends to do the same (which parent minds saving serious money while buying a new mobile every year for their kids)

Also, what is interesting with Rahul Sharma & the guys who run Micromax is that they consciously side-stepped the "Buy-in-China-Sell-in_India" model once the brand reached a certain "maturity" stage.
Innovation, leaps of faith, putting their own skin (brand) in the game etc. ... they seem to have played the game with the "Long Haul" in mind.

And its paying off for them.

A few other brands launched around the same time as Micromax, continue their "commoditised" life on store shelves...living off the "MadeInChina" story & trading their wares in India.

As for the real LongHaul, only time will tell.
Till then I hope to continue to believe in the Micromax story.

About the author

Rohin Dharmakumar
Rohin Dharmakumar

Co-founder

Owntastic

Rohin's degrees were fairly predictable, even stereotypical, for a south Indian working class kid born in the 70's – an undergraduate in engineering followed by a post-graduate in management. Both back to back of course, in keeping with the popular Indian belief of finishing your education in one continuous stretch before starting one's career. Thankfully, his career has been quite the opposite.


Starting in 2001 with a venture-funded IT consulting company with an "e" in its name (unfortunately just as the dotcom boom was starting to crater) he's worked across a diverse set of sectors that's finally culminated in entrepreneurship. These included being a business analyst in an IT services company; a partner in a leading global PR firm; a business journalist with Forbes India; and finally, a bootstrapped, early-stage entrepreneur building a mobile startup in easily the best place to do so in India – Bangalore.


Though serendipitous at first glance, in hindsight he's come to realize there was a pattern to his career: he was unconsciously moving away from large corporations and their structured job roles towards smaller, nimbler and more independent companies and roles. He was progressing through roles with increasingly greater freedom to engage his curiosity, utilize his interests, and validate his ideas. Thus, in many ways entrepreneurship is both the culmination and pinnacle of that journey for him.


He will be writing occasionally for Founding Fuel as an inside chronicler of Indian entrepreneurship who's been on multiple sides of the storytelling process. His stories will lie at the intersection of journalism, entrepreneurship and people.

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