Micromax story

Micromax story

Rahul Sharma, co-founder and executive director of Micromax, has to be prised away from his Gurgaon office. It’s understandable. Micromax has, in a span of 13 years, gone from being the company that made parts for Nokia, to one selling cheap phones no one really trusted, to being the third most successful handset brand in India, according to a recent study.

The October report by technology analysts CyberMedia Research also showed it to be the No. 1 in tablets, ahead of Samsung and Apple; data released in January shows that Samsung is leading again, by a small margin. Recently the company launched Android set-top boxes and televisions as well, recording a turnover of Rs.1,978 crore in 2011-12.

We meet at The Oberoi hotel in Gurgaon, and 38-year-old Sharma comes across as down-to-earth and relatable. Sharma is—in his own words—a middle-class boy who made it big, but despite the money, life hasn’t changed much. “My family is my parents and my sisters. My sisters are married now so it’s really just my parents and me,” he says.

His passion lies in creating new technologies. “Other people want to go to the golf course, I want to come to office, this is where I have fun. All four of us (the founders) are techies that way.” Sharma’s a geek who loves his Bose SoundDock and whose pet hobby is observing how other companies implement technology, and figuring out how that can be improved.

In school, Sharma knew he wanted to be an engineer, though he didn’t know exactly what he wanted to do. By the time he finished studying mechanical engineering in Nagpur, Maharashtra, he had decided that he didn’t want to enter the corporate world as so many classmates would.

He says, “We were all friends; me and Rajesh (Agarwal) were neighbours, and I knew Sumeet (Arora) and Vikas (Jain) from college, and when we had finished studying, it was 2000, and we thought, everything is booming, we should also start a business.”

At the time, Agarwal was already in the hardware business, but since the IT boom was at its peak, the friends decided to get into the software industry.

“One thing we couldn’t decide on was a name—we had all sorts of crazy ideas which I can’t even remember, but then we thought Micromax sounded good. We thought, this is cool. So we named the company Micromax Informatics.”

Our drinks come, masala chai for me and cappuccino for him, and after taking a sip, Sharma grins and says: “That’s still our name, it doesn’t make sense any more, but we went to the registrar and found that it was the only name with Micromax available so we couldn’t change it any more. Otherwise we should be Micromax Telematics.” This eye for detail is precisely what helped drive Micromax’s growth.

In the early days, the team worked on low-end technology. The company got a boost when Nokia became a partner in 2001, but the real growth came from Bharti Airtel Ltd. Sharma explains: “In those days, payphones were only BSNL (Bharat Sanchar Nigam Ltd), MTNL (Mahanagar Telephone Nigam Ltd) lines because the technology for the billing was operating at a particular frequency which only those lines could work at. That was such a stupid thing. We created a simple tool to convert the frequency, which allowed Airtel to build a huge network of payphones, and it became a big business for us.”

"IN PARENTHESIS: Sharma loves cars, and felt he had arrived when he bought a BMW. Combining his love for travel and cars, he’s a Formula One fan who says that attending the Circuit de Spa-Francorchamps in Belgium is one of the most memorable events of his life. He says: “I had the opportunity to visit this circuit and the experience was truly unbelievable. I used to take an off on the race day and tell everyone not to disturb me while watching the race.” This isn’t possible any more, he says, but adds, “Work keeps me busy but I still make sure I catch the highlights of every race”"

That’s when Sharma and his fellow entrepreneurs started feeling they had arrived. He says: “I was the son of a school principal, Sumeet was the son of a brigadier. We were all middle-class boys who were suddenly driving BMWs, and life was good.” Yet Sharma felt more was possible.

While Agarwal and Jain are directly involved in building the business, and Arora is the head of technology, Sharma’s role is to incubate technology. He jokes, “We spent a lot of money educating Sumeet, so now we come up with strange ideas and he finds ways to make them work.”

One of those strange ideas was to start making mobile phones. Sharma says: “We started off with a phone that you would only have to charge once a month. This was very simple to do, by the way, and to this day I don’t know why every company isn’t already doing this.”

They made the phone, but no distributor wanted to touch it.

After this experience, Sharma decided to trust his own judgement, and focus on creating new types of technology instead of on price. “We don’t do focus groups,” he says, “Samsung will do a focus group, Nokia will do a focus group, everyone does a focus group and you end up with no new ideas.” And new ideas, he had decided, were crucial to the continued growth of Micromax.

To get ideas, Sharma says he goes to mobile phone stores to work as a salesman from time to time, and gets feedback from customers. That’s what led him to approach Arora with the idea of dual SIM phones which used a single baseband, so as to make the technology affordable. Today, dual SIM phones are extremely popular, and are made by companies like Nokia and Samsung as well—Micromax was the first to introduce both the 30-day battery recharge and dual SIM phones with a single baseband in India.

“I’m not the customer. You’re not the customer. There’s around 5% of people who will use the full features of a phone, and need to pay Rs.40,000 for a phone. For the 95%, we make technology that makes their life better and we don’t charge them for things they don’t need,” he says.

At the same time, he doesn’t like the suggestion that they’re playing a pricing game with the competition. He says, “When we came out, we were cheaper because we wanted to give a fair deal to buyers, but then other people jumped in with really cheap, low-quality handsets.”

“We were sandwiched between them and between the Nokias and Samsungs, and this muddled our position. But most of those companies aren’t here any more, because the only thing they offered was the price.” He says this with a great deal of satisfaction, though there’s no denying that Micromax does offer products for a lot less than the international competition—its recently launched smartphones and tablets are almost half the price of similar devices from brands like Samsung.

Building TVs shows Micromax’s commitment to doing different things. “It not really about TVs, it’s about screens,” Sharma says. “In time, all TVs are going to be smart, and they’re going to talk to your phone and your tablet. We want to make sure that you have a Micromax TV, a Micromax tablet and a Micromax phone, and to do that, we’re starting with the best TVs we can make, and we’re going to keep improving these.”

Part of Micromax’s growth also comes from looking at the international market. Sharma says he has high hopes of the US and European markets. He mixes his love of travelling with business—he has just returned from a business trip to the US, which he calls a great vacation.

“We started off small because there was some scepticism but we’re seeing a good response from the carriers in the US, which is how you get into that market. We’re able to offer a value which Chinese companies like Huawei and ZTE aren’t doing, because their mindset is to compete on price. We learnt early that you’re not going to succeed on just price—you need to offer something more,” he says.

Today, Micromax has a presence in 12 countries besides India, and claims to be selling 1.75 million handsets and 70,000 tablets every month. It’s targeting Rs.2,800 crore in turnover, which would require the company to continue to gain momentum around the world, but Sharma is confident. For now, though, he’s looking forward to trips to the US, to travel, and to set these plans in motion.