Micromax founders forced back to helm the company as sales plunge
The return of Rahul Sharma and Vikas Jain to Micromax and the departures of its chief executive seem to suggest that some companies may be best managed by founders, rather than professional CEOsbusiness Updated: Mar 04, 2016 14:52 IST
In the third quarter of 2014, Micromax Informatics’ smartphone marketshare had peaked – it was 20%. Samsung was 24%. For once everyone thought that Micromax will overtake Samsung. Analyst said that the Indian handset maker had the potential to overtake the leader in the smartphone space. But that didn’t happen.
By the end of the 2015, Samsung cornered almost 27% of the market, and Micromax was down to 14.1%. Micromax’ problem doesn’t end there – some of the other phonemakers are slowly closing in. Lenovo had 11.8% and Intex, 9.4% of the market. Both were not in the list of top five phone makers a year ago.
A recent report by research firm IDC said, “Micromax maintained the second position with 14.1% share in 2015 Q4 but shipments fell 12.1% year-over-year and 23.5% over previous quarter. Micromax is facing tremendous competition from both home-grown and China-based firms at different price points under $200.”
No wonder, Vineet Taneja, who joined Micromax as the CEO, from Samsung quit. Sources said that the Taneja resigned on grounds of non-performance. To be sure, Micromax is not getting a professionally run CEO to run the company, any time soon.
Co-founders Rahul Sharma and Vikas Jain are back in drivers’ seat.
Micromax is going back to its old structure, when the company was led by its founders, and went ahead to become the largest Indian handset maker in the country. To be sure, when Micromax started, there were about 70-80 other handset makers in the country, importing phones from China and Taiwan, branding them here and pushing in the market. Only few like Micromax, Karbonn and Lava distinguished itself from the heard.
It is a new era in the handset business. It is no more about the devices, only. Device makers are talking about building an eco-system that is driven by the internet. Even Micromax is speaking the same language. But, this would require much more than just talking.
In 2014, Micromax decided that it would institutionalise itself – it hired former Airtel CEO Sanjay Kapoor, and then Taneja. Kapoor’s discordant exit happened last year, and Taneja’s exit shows that some companies are best managed by the founders.
Sharma, who has been the architect of company for so many years has a lot on his plate – he designs the initial structure of all the phones, sometimes even on paper napkins when he is on a flight. Jain is good with operations. But the duo will have a hard time getting back Micromax on the same growth path – especially with growth of Chinese handset makers in the mid-range segment, something which Micromax was eying.