Great Start For Motorola, But Can They Sustain It?

In the smartphone industry of the country, the rules of the game, the leaders, the strategies, everything has been changing faster than ever before. More and more new players are coming in the market. Many unheard names and unknown brands have emerged - some have risen literally from the dead while others have faced a sudden fall. That’s how unpredictable, rapidly changing and ever evolving has been the smartphone market in the country over the last few years.

This market has also been a witness to an interesting brand journey of Motorola - a brand, which due to intense competition, lost its grip and packed its bag from the Indian market in 2012 but came back with a bang in 2014.

Moto’s stellar second innings

Motorola made its comeback in the Indian market in February, 2014, with the launch of its Moto G through an exclusive online-only distribution via flipkart.com. Within just two quarters of these new launches, Motorola has dethroned Nokia from number fourth position in the Indian smartphone market.

In the second quarter of this year (April to June 2014) Motorola shipped 955,650 smartphones and became the fourth largest smartphone brand. Compared to that, then dethroned Nokia shipped 633,720 units of smartphones. The three companies ahead of Motorola in this space are Samsung, Micromax and Karbonn. These three brands together have shipped over 8.2 million units in this period. The overall growth of this segment in the second quarter was 9% over the last quarter.

In the first quarter of this year (January to March, 2014), Nokia was number fourth, with 583,160 smartphones as against Motorola's shipment of 379,310 units, according to a report by handset tracker company Canalys.

Motorola’s success has been riding on its three models launched in the last six months Moto G launched at Rs 12,499, Moto X priced at Rs 23,999 and Moto E priced at Rs 6,999.

The game changer: online distribution

The biggest game changer for Motorola in its second innings in India was its bold step to opt for an online only distribution model and tied up with one of India’s biggest online retailer, Flipkart.com, to sell its smartphones exclusively. This was quite a bold move for a brand which has a presence all over the world. Before the launch, some called this move meek, some called it stupid. But this move paid off pretty well for Motorola. In fact, Flipkart went out of stock of Moto G within just 15 minutes of opening the sales for 16GB Moto G orders for the first time. The company launched its other models Moto X and Moto E also on Flipkart.

So how did this online distribution strategy really help Motorola? Well, an online distribution saved the company from all the time, money and efforts in building up a distribution network. This meant a timely launch without much time and money spent in putting in place a distribution network. Moreover, the company had a significant saving by not having to pay the distributor and retailer margins, which usually go up to 6-15%. All these helped the company offer its smartphones at a more lucrative price and consumers lapped it up.

Experts say if the company went for the traditional distribution model, the smartphones could have been priced about Rs 3,000-5,000 higher. Now that could have changed the game for the brand in not a good way.

The challenges ahead

So far so good, but the road ahead is not going to be as easy for Motorola as it has been so far. While an online only distribution is a good strategy to start with, there can be a lot of challenges if a company follows just that in the long run. First and the foremost challenge will be of reach. India is a huge country and the Internet penetration is still just 12.6%, not to mention the challenging quality of it beyond the metros and big cities. So if the company chooses to stick only to online distribution, it certainly will be limiting itself.

Moreover, the online-only strategy is now followed by many other brands, including China’s Xiaomi, Asus, and others. So, the uniqueness of that is gone now.

Another challenge that Motorola needs to watch out for is the intense competition in the smartphone market with a huge number of players. That brings the price competition and the heat is already felt by the brand. With the recent overwhelming response to Xiaomi’s MI3 launch, Motorola had to bring the price of its Moto G by Rs 2,000 to ensure it stays as a lucrative option to the consumers.

Certainly, the road ahead for Motorola will be an interesting one with possibilities of many highs as well as lows, keeping the nature of the Indian market and the competition.