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Indian smartphone-maker Micromax Informatics Ltd. said Thursday it plans to start selling handsets in China next year and potentially go public in two years, as it looks to boost sales and generate cash to stay relevant in a fiercely competitive industry.
The company aims to become the world’s fifth-largest smartphone maker by number of phones sold by 2020, and can’t do that without access to Chinese consumers and more cash from a public offering or private investors, said Micromax co-founder Vikas Jain at the Rise technology conference in Hong Kong.
It is an ambitious goal for a company that currently sells a little over a million smartphones a month, mostly in India. China’s Vivo, which is currently the world’s fifth-largest smartphone maker, sells more than four million phones a month, according to International Data Corp. Samsung Electronics Co. is the world’s largest smartphone-maker.
Meanwhile Micromax, which is India’s second-largest smartphone maker after Samsung, has seen its share of the South Asian nation’s market decline over the past year as it faces stiffening competition from Samsung and a host of Chinese manufacturers.
As the growth of its business has slowed, Micromax’s four co-founders have reasserted control of day-to-day operations, and some high profile hires, like Vineet Taneja, the former head of Samsung’s India business, have resigned.
The company plans to generate cash to fund the acquisition of companies that will help Micromax build a network of services to help its phones stand out in the crowd of competitors. “The company can’t do that without more cash coming in,” Mr. Jain said.
The announcement is a sign that India’s smartphone market won’t save a struggling global smartphone industry. Shipments of handsets to India have declined over the past six months, according to IDC data. That is a sign that unsold phones are piling up in Indian warehouses, said IDC in a report. Most of the unsold merchandise are priced below $100 and aimed at first-time smartphone buyers, who account for much of Micromax’s sales.
However, China might not be the answer for the smartphone maker, analysts say. “I’m not sure why they’re doing this,” said Kiranjeet Kaur, an analyst at IDC. “The Chinese market is not growing and it’s really competitive. I don’t know how they will survive there.”
Even Apple Inc. has struggled to keep afloat in China, with sales falling to 13.1 million devices in the first three months of the year from 16.2 million a year earlier.
Micromax has made inroads in other markets already. It sells phones in neighboring Nepal and is the third-largest smartphone vendor in Russia.
Moving abroad entails moving upmarket. The company recently unveiled the latest device from its premium brand, Yu. The Yunicorn has a large screen, and features like a fingerprint sensor, which allows it to better compete with rivals Samsung and China’s Xiaomi Corp.
The price tag, 12,999 rupees ($193), makes it one of the company’s most expensive models.
(THE WALL STREET JOURNAL)
