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Can YU be Micromax's ace in the hole?

19-December-2014
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Can YU be Micromax's ace in the hole?

Micromax has announced the first phone of its new YU sub-brand—the Yureka. The much hyped YU brand will feature devices running on CyanogenMod, one of the most popular Android-based OS currently. Micromax has in fact tied up exclusively with Cyanogen to build and distribute devices using this OS in India and neighbouring nations. This had created some controversy with Chinese phone maker OnePlus, which is also planning to enter the Indian market in December with the OnePlus One, a popular phone that also runs on CyanogenMod.

Speaking at the launch, Rahul Sharma, Co-founder of Micromax said, “YU is not about a device but an ecosystem. The future is whatever the customer wants and not the manufacturer. Under YU, there are not only going to be phones.” He hinted that wearable technology could be a part of the brand in the future, saying, “The world is moving from apps to services. Services is about a platform. Can a movie be released on the phone? We are going to do a lot of work around services,” he said.

The first device, Yureka runs the latest version of CyanogenMod and has impressive hardware specifications and is priced aggressively at Rs 8,999. The intention is clear; Micromax has been aggressively expanding and eating up marketshare in India and other key markets and it sees the launch of YU as a key differentiator between it and markets.

According to IDC, in Q3 2014, Micromax trailed Samsung in overall marketshare by 4% (Samsung had 24% of the marketshare with Micromax at 20%). Globally, Micromax was ranked the 10th largest smartphone manufacturer in terms of sales and marketshare in Q3’14 by Gartner. Cyanogen currently has more than 12 million active units according to a June 2014 report. In fact, according to a Digitimes Research report, Cyanogen is considered one of three OS most likely to become the key mainstream Android OS forks in coming years.

The IDC APAC Quarterly Mobile Phone Tracker stated that in India, Samsung witnessed shipment growth in Q3 2014 but the growth is noted to be lower than the industry average. One the other hand, the same report said that Micromax has been focussing on concentrating on a limited number of strategic devices; a strategy that has reaped awards over the past couple of years. In an earlier interview, when rumours were rife that Micromax had overtaken Samsung in India in marketshare, CMO Shubhodip Pal had said, “When I came in, we had around 30 odd products but we knocked off a lot of them and concentrated on just 4.” It has also managed to shake off the perception that low prices equate low quality with big brand endorsements (think, Hugh Jackman) and providing hardware specs comparable with high-end phones.

How Micromax is dethroning Samsung as India's No.1 mobile brand

Will the YU brand cause a disruption in the Indian smartphone market, which is the fastest growing smartphone market in the world and expected to grow at a CAGR of about 40% for the next 5 years?

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