Micromax To Discontinue YU Mobiles Brand, Read Why

Sad but true. YU Mobiles, the ambitious smartphone brand, almost solely created by Rahul Sharma – co-founder of Micromax, is being shut down. Company insiders say the brand is being discontinued as the parent company, Micromax, has failed to find any differentiating value for YU Mobiles.

It can be recalled that the smartphone brand that was born in late 2014 and had launched four smartphones in last two years, has not launched a single device for almost a year now. The last smartphone from YU Mobiles – Yunicorn – was launched in late May 2016.

Post Yunicorn, the company could never develop a product road map for YU nor find any value for this brand.

YU Mobiles did not offer any replies to our queries on the discontinuation of the smartphone brand, and Rahul Sharma’s response was not convincing.

“Just wait and see,” he said.

But we have confirmation from sources, some current employees and few ex-employees of the firm – all belonged to the firm’s decision making body – that Micromax has already discontinued YU Mobiles. The manpower and other units of YU have been merged to the parent company.

On products level, there ares till some units left to be sold but customers are not buying the YU branded phones as  the operating system that run on these devices – CyanogenMod – has been closed and stopped offering anymore services or updates since December last year.

What Went Wrong?
“It was a wrong and whimsical decision at the first place,” says a source who has been a part of the decision making body at Micromax. YU was not born by then.

The source under conditions of anonymity said none of the founding members of Micromax, except Rahul Sharma was in favor of carving out another brand from Micromax.

The Gurgaon based company by late 2014 was a formidable force in Indian mobile phone space and commanded the top position among domestic mobile vendors and was much ahead of its competitors like Lava, Karbonn or Intex. The company, then, was number 2 in smartphone sales, just below Samsung, and was selling huge volumes of feature phones that propelled its volume market share.

“None of us find any value in creating one more brand, when the time was to consolidate our position in the market,” the source added.

But Rahul, the source added, convinced the team that ‘online’ is a market yet to be tapped by Micromax and the company can create one more revenue source if a separate brand is solely created to be distributed through the online retail distribution channel. Motorola’s re-entry to India and its success in the online channel was cited as one of the examples in the late evening meeting.

The team, however, was still not convinced and even was not ready to put money in a new venture, when the discussions were going on to invest money in setting up its manufacturing plant.

The source said Rahul took the onus on himself and created the brand with holding 99% stake in the newly formed firm, YU Televentures Pvt. Ltd, and two other co-founders – Vikas Jain and Sumeet Arora, jointly holding just 1% share. Vinamra Shastri and Sachin Jain joined the board after more than a year.

Creating Differential Value

Ambitious as it may sound, YU wanted to project itself as a completely different brand from Micromax by bringing some sort of innovation, while the reality was none of the smartphone makers of these days, and more precisely the Indian ones, have so far failed on bringing any innovations to their product portfolio.

But to convince the company, the industry, and its prospective customers, YU projected three differentiating factors – online-only brand, CyanogenMod as OS and connected ecosystem.

Unfortunately, going ahead, the company failed on all these three value points.

The company’s first smartphone Yureka was launched in January 2015 with the promise to be online-only brand but within a year – by November 2016, YU fell back to traditional offline stores with its partnership with Reliance Retail.

On connected ecosystem too, the company could not make any mark besides bringing some run on the mill products like health and fitness bands. The company launched products like YUfit, HealthYu to monitor physical activities including running, sleeping heartbeat, blood pressure etc. These products did not get expected results as there was no substantial value for users. YU also launched a portable printer – YUpix and a powerbank – jYUice, in the later part of the year.

Shutdown Of Cyanogen

This was the last nail on the coffin for YU. Rumors were around by second half of 2016 that CyanogenMod, the OS of Cyanogen is nearing a closure, and YU’s smartphones were based on Cyanogen OS.

And by December 2016, Cyanogen – whose CEO had once made an audacious statement that it will ‘put a bullet through Google’s head’ was found lowering its shutters, and the OS was officially shut down from 31 December, 2016. And this left device makers that are based on CyahogenMod scratching their heads. OnePlus survived but YU was no OnePlus.

Nothing Left For YU

After the launch of Yunicorn, the company’s last smartphone, it was expected that YU will bring its next device around October, then it was pushed for December 2016. But after the closure of Cyanogen, it is believed, the company has pushed itself to the end and a formal announcement may never come.

Now What…

Now, the parent company Micromax is solely focusing on Micromax products. And the management felt this is the need of the hour as the company has been loosing grip on its market position to slew of Chinese brands including Vivo, Xiaomi and Oppo. In IDC’s latest quarterly mobile tracker report, none of the Indian phone makers were featured in the top 5. From Micromax perspective also, the company is not doing good as it had not launched a single flagship product in the last 3 quarters. As recent as last month the company launched a new product, Dual 5, putting it in its premium category devices and expects to gain its lost glory.

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