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OM in the News: Churning Out Smartphones Like Fast Fashion

June 11, 2015
Micromax's HQ in Gurgaon, India

Micromax’s HQ in Gurgaon, India

In Chapter 5 (Design of Goods and Services), we discuss the importance of new product development. Industry leaders derive almost 50% of their sales from new products–those created in the past 5 years. But the smartphone market is a world apart–and India’s Micromax, writes The Wall Street Journal (June 5, 2015), sits at the bleeding edge of the global wars.

Early last year, Micromax decided consumers wanted a handset that could be operated in many of the country’s 20-plus official languages. Four months later, it unveiled the $110 Unite, which let users label their apps, type, send messages and interact on social media in 21 different scripts—rather than just English and Hindi, as is common for Indian phones. Many handset companies wouldn’t have released another smartphone for months. But the Unite was one of several handsets Micromax unveiled within weeks of each other, including the $150 Canvas Win, and the $131 Canvas Doodle 3, featuring a 6-inch screen.

While Apple launches only two new iPhone models a year and Xiaomi around four, Micromax shipped more than 30 new smartphones last year ranging in price from $50 to more than $300. The frenetic pace has made Micromax the smartphone equivalent of “fast fashion” chains like Zara or H&M, which refresh their shelves regularly with inexpensive clothes that reflect what is on fashion-show runways. Micromax says it can now take a phone from concept to store shelves in 3 months, 4 times as fast as when it first started. It does this by slapping together off-the-shelf hardware from China, making adjustments to follow fast-moving consumer trends, and shipping out a new model every few weeks. (The average selling price for smartphones world-wide fell to $299 last year versus $427 in 2010.)

Classroom discussion questions:

1. What is Micromax’s product strategy?

2. Why is it important for firms to continually introduce new products?

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