With a well-defined product vision and an R&D set-up to support it, Micromax can successfully generated innovative handsets that can revolutionize the telecom consumer space. Micromax through its thorough understanding of the Indian market is already coming up with innovative handsets to compete in the market. Company is flooding the Indian market with multiple options aimed at different consumer segments and not only rural segment. Some of them are:-

* The R&D team has managed to come up with phones that can also be used as a remote control for consumer durables in a household, say a TV, an AC or a DVD player.

* Single click access to popular social networking sites like Facebook and Twitter.

* Created Q55, a clamshell phone which had Swarovski Crystal on the keys and priced at just Rs 5,500 – targeting women in smaller towns, like Hapur and Belgaum, who would like the chic appeal of this handset.

* The 30 day standby battery life on mobile sets was a big success especially in the rural areas where power failures are common.

* About 85% of its handsets have dual SIM capability; this also helped the company in India where people have multiple SIMs because prepaid connection is in majority.

* Handsets with switching networks option (GSM-CDMA)

* Mobile handsets with 3D motion gaming technology – this has been targeted at the youth taking into account the growing gaming culture.

Thus we see that it is not only the lower price points but also the growing R&D capabilities that have helped Micromax achieve the 4th largest market share. To build sustainable competitive advantage successful companies globally have focused on R&D to support the product(s) vision. Product vision was in-turn developed based on understanding of customer preferences, competitive products and domestic/international market developments. Only then can you cater to the dynamic industry that telecom is and also country specific needs. Micromax now aims to touch a turnover of Rs.30 billion by next year according to its COO Rahul Sharma.

SAR group, the manufacturers of Luminous brand now plan to enter the Indian market under a new entity called Wynn Telecom. The company plans to spend $25 million initially and later scale it up to $100 million dollars which includes setting up a plant in Himachal and a new design center in China for creating India specific products.

These examples illustrate the fact that an effective R&D strategy is something a couple of players have started looking at but is that enough and whether others will realize its importance soon has to be still seen. Also innovation as a single independent strategy might not also work. It has to be carefully coupled with cost leadership and customer focus. The figure below brings out the point that while lot of new players are focusing on cost leadership it's probably the time for them to look at the other two important dimensions.

Customer focus: - As illustrated through the Micromax example customer focus can also be the means to gain market share and the company does not always have to depend on disruptive technology to gain competitive advantage. Establish a correct understanding of the market conditions, competition, customer preferences through research.

Technology Innovation: - It is very important for any mobile handset company to be abreast with the latest technology and also continuously evolve itself to bring out innovative products.

Cost Leadership: - To compete in markets like India cost plays an important role and companies have to continuously cut down on costs to compete on price. A pricing strategy without effective cost leadership is not sustainable over the longer run and results in eroding profits. R&D efforts need to continuously focus on reducing cost.

Mobile handset player needs to focus its R&D efforts in all of the above areas. Prioritization can be done based on the long-term product pipeline in mind and a subsequent roadmap and gap analysis. Essentially, what you have versus what you have to work upon and create. Interestingly there are several vendors in India itself who can help if you don't have the skills internally today. India also has the talent that is skilled in latest mobile technologies/platforms/apps and is working on some of the most important futuristic phone models in the world. MNC R&D centers in India have exploded with companies recognizing India as a low cost center with quality workforce having domestic market opportunities and available talent pool and vendor base. There are currently 120 MNC R&D centers in India (Please check Knowledgefaber Telecom R&D Report). Some of these companies are Nokia, Samsung, Motorola, Qualcomm, CISCO, Avaya etc. From this we can figure out that India is soon going to become the topmost R&D destination for the telecom world and the trend is more likely to continue in the future.

Knowledgefaber believes that for a sustainable growth strategy mobile manufacturers should focus on R&D as one of their core areas. Survival purely on the basis of price points with higher volume is not sustainable in the longer run. An effective cost leadership strategy coupled with customer focus and technological innovations can help companies garner market share and maintain it in the longer run. With Indian mobile industry adding 16 million handsets a month the opportunity is tremendous for these new manufacturers to enter but they should be weary of competing with giants like Nokia, Samsung, LG and an effective R&D culture in these companies can help them defend their market share. In times to come mobile phones will be the center of not only the communication processes but also finance, banking, and healthcare activities (Please check other Knowledgefaber articles on those subjects). It is not only important to innovate today or at any given point of time but to innovate continuously and be ahead of the curve. As was seen in the case of market leader Nokia who were well ahead in the feature phone and low-med end phone market but they missed the Smartphone bus. They didn't read the Smartphone market as a great opportunity. Result: lost market share to I-phone and Blackberry. Those handset companies which are able to continuously read the market dynamics, changing consumer needs, international and domestic trends would be able to develop the right product roadmap. Add to that a solid R&D team to execute the task of creating those products quickly would be the success factor.

By Amit Goel and Varun Uppal, Knowledgefaber

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