Something very surprising happened today: Lenovo announced that it would sell the Lenovo X2 for a price of just Rs 19,990.
You might wonder what is so special about the launch and why this should come as such big news.
Let us pause for a minute and take in the specifications.
Look at the Lenovo Vibe X2. Check the features. Try to figure out a single missing feature that is available in flagship models like the Sony Z3 (price Rs 50,000), the HTC One M8 (price 41,000).
The fact is, specification for specification, the Lenovo X2 offers the same hardware as the HTC One M8 and the Sony Xperia Z3, but is priced at less than half of what the other two are.
So, shouldn’t it be HTC, Samsung and Sony who should be worried instead of Indian phone brands such as Micromax, Lava, Karbonn Mobile, Spice etc?
THE PRICE CONUNDRUM
What is really happening is that the Chinese bunch – Huawei, Lenovo and Xiaomi, along with Japan’s Panasonic, are muscling in to the low-priced, high-specifications market, and guess who used to dominate this segment? You’re right if you said Micromax, Karbonn and Spice.
When Xiaomi launched its Mi3 two months ago at a price of 13,999, people dismissed it as a one-off. Indeed, Xiaomi doesn’t recover all of the cost of its phone from the consumer at the time of purchase. Some of the value is recovered through content alliances.
So Xiaomi was dismissed as an oddity by Indian brands. They believed the Chinese firm will not be able to corner the market. Indeed, to a large extent, the Indian companies were proved right.
After selling about 90,000 units, Xiaomi hung up on Mi3 sales in India. The way Indians were gobbling up the phone, even 5 lakh units would have been inadequate to meet the demand.
But Xiaomi’s spectacular sales and the buzz it created opened the eyes of its fellow Chinese competitors like Huawei, Lenovo and even the Japanese giant Panasonic.
It is their reaction that now threatens to seal the fate of Indian phone brands such as Micromax.
Over the past one month, these firms have launched high-end phones at price points that were previously considered the exclusive preserve of Indian brands such as Micromax, Lava, Xolo etc..
It began with Moto X2, but that was still priced at Rs 31,000 (Moto is owned by Lenovo), and that didn’t really threaten Indian players since they played in the sub-21,000 market.
Then came the Huawei Honor 6, priced at just Rs 19,999. This was definitely in Indian brand territory. The Micromax Gold A300 and the Micromax A350 were priced in the Rs 18,000-20,000 range. (The Gold’s price has since fallen to Rs 15,000 and that of the A350 to Rs 18,000.)
But do these Micromax phones offer what the Honor 6 is offering? Can they withstand the higher brand perception enjoyed by multi-national companies like Huawei and Lenovo by offering better specifications for the same price?
For a long time, the answer was yes. But with the Honor 6 and today’s launch of Lenovo X2, the answer is – No, the MNCs are offering better specs at largely the same price.
For example, both Micromax Gold A300 and Knight A350 come with 2 GB of RAM and Cortex A7 low power octa-core processors.
In comparison, the Huawei Honor 6 packs a 1.7 GHz octa-core Huawei chip and dual channel 3 GB RAM.
The comparison gets even more lopsided with the Lenovo Vibe X2. Not only is processor about twice as powerful as those found in the Micromax models, but the Lenovo Vibe X2 also comes with LTE 4G.
Other than the entry-level LG F60, no other phone priced below Rs 20,000 offers 4G LTE. No Indian brand has come out with a phone that has 4G LTE at any price point.
In other words, the Indian brands are losing out in the Rs 20,000 market as well. The only other markets are the Rs 5,000 market and the Rs 10,000 market.
Here too, the MNC brands, especially Panasonic and Huawei, are beginning to lean heavily on Indian players.
While Panasonic’s offerings are not cheaper than those of Indian brands, the fact is that other than the Huawei Holly and the RedMi 1S, this is the first time an international brand is attacking these markets so aggressively.
So, what do you think: Will the MNCs clean out the Indian brands?