Indian manufacturer Micromax’s wholly-owned subsidiary Yu Televentures has started teasing its second handset, codenamed Project Caesar. The handset is set to launch sometime next month, and will continue to offer CyanogenMod out of the box following an exclusive partnership between the two companies in India.

In the teaser, Yu says, “Stay tuned, the fYUture is coming!” followed by an image of a lollipop and a finger of KitKat, with the tagline, “KitKat in the age of Lollipop? Give Me a break.”

The Me stylization is a reference to Xiaomi’s Mi branding in India, and the remark is concerning the fact that MIUI 6 — the latest version of the operating system found on Xiaomi’s products — is still based on Android 4.4 KitKat.

While the teaser is further proof that Yu’s upcoming smartphone will run CyanogenMod 12, which is based on Android 5.0 Lollipop, out of the box. The device itself is said to be a Qualcomm reference design with mid-range hardware that will be offered at an affordable price tag, as is the case with Yu Yureka, which is essentially a rebranded Coolpad F2 that offers a 720p display, Snapdragon 615 SoC, 2GB RAM, 16GB internal memory, 13MP camera, 5MP front camera and a 2,500mAh battery for the equivalent of $150.

Yu has been steadily gaining attraction since launching the Yureka in India late last year, accruing over 175,000 sales thus far. The handset is set to make the switch to Android 5.0 in the coming weeks, with the possibility of the update coinciding with the launch of the second Yu handset looking likely at this stage. It is clear that Yu is positioning itself as a direct competitor to Xiaomi, with both vendors offering a differentiated software experience along with stellar hardware at an affordable price.

Xiaomi is set to launch the Mi Pad and Redmi 2 later this month, and it is entirely within the realm of reason that Yu’s next handset will target Xiaomi’s upcoming handset.

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In a field dominated by affordable handsets from the likes of Xiaomi, Motorola and others, Indian vendor Micromax is looking to offer something unique through its Yu sub-brand, which launched its first handset earlier this week, the Yureka.

From the outset, the Yureka is aimed at a younger audience, and as such will be available for sale exclusively online on Amazon India. Although seven out of ten mobiles in India are sold offline, the e-commerce segment is starting to challenge the established brick-and-mortar vendors, as evidenced by Xiaomi’s stellar online-only sales, which amounted to over 800,000 sales in under six months.

The start of something great

Micromax is looking to emulate a similar kind of success with the Yu series. Until now, the brand has failed to successfully distinguish itself in the Indian market, but with the exclusive partnership with Cyanogen, Micromax has the potential to offer not only affordable hardware, but also a strong suite of software-based services as well.

The deal with Cyanogen sees Micromax getting exclusive rights to CyanogenMod in India. The brand’s Yu series of handsets will run a custom version of Cyanogen’s ROM out of the box, and will receive updates directly from Cyanogen. The exclusivity agreement does not bode well for OnePlus, which recently made its debut in India. After launching the OnePlus One in India earlier this month, OnePlus was served with a court order issued on behalf of Micromax to curtail all sales of the device.

The issue at hand was the usage of Cyanogen’s branding and software, which as we mentioned earlier is exclusive to Micromax in India. Although OnePlus has a deal with Cyanogen to use its software in global markets, that agreement does not extend to India. While this may not be great news for OnePlus, it is looking to remedy the situation by launching its own ROM.

As for Micromax, the Indian vendor is looking to leverage the advantages offered by Cyanogen to build a digital ecosystem of content, which will be a first for any local vendor. With the Yu series, Micromax is looking to software as the main driver for revenue as the hardware itself does not look like it is being sold at a high margin.

The Yureka moment

The Yureka, for instance, comes with stellar hardware for its launch price of $145. Included is a 5.5-inch 720p display, 64-bit eight-core Qualcomm Snapdragon 615 SoC, 2 GB RAM, 16 GB internal memory, microSD card slot, 13 MP camera at the back with LED flash, 5 MP front shooter and 2,500 mAh battery. The hardware is in fact better than what Xiaomi is offering with the Redmi Note, and then there is the added advantage of CyanogenMod, which offers a host of extra features from stock Android.

The Yureka is the first offering in the Yu series, with Micromax stating that additional handsets will be launched early next year. The brand has also mentioned that it will be looking at the mid-tier, and even the high-end segments in the future, which should be interesting given that most of Micromax’s success has been in the entry-level segment thus far.

Considering the hardware on offer, it is easy to see how Micromax is not looking to make a significant amount of money through device sales. It is likely that the brand will follow Xiaomi’s model of selling devices at a low cost, and then making most of the profit through software services. During the announcement, Micromax co-founder Rahul Sharma announced that the vendor would be investing in building an ecosystem of content tailored for Indian users. In a country where customers are generally reticent when it comes to buying digital goods and services, it remains to be seen whether Micromax’s efforts bear fruit.

For now, however, the future looks bright for the Indian vendor. The latest sales numbers reveal that Micromax has managed to successfully erode Samsung’s market share in the country by a few percentage points in the last quarter, and with the launch of the Yu series, the brand finally has that differentiating factor it has been seeking for so long.

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Indian e-commerce industry is on the growth trajectory, with several retailers getting a massive influx of revenues. Amazon (NASDAQ:AMZN) CEO Jeff Bezos is in the country to chart further growth for Amazon’s Indian outfit, and there have been significant investments over the course of the year in other major e-commerce stores like Flipkart.

However, it looks like there will be a major change in the mobile segment as it was revealed earlier this month that Samsung (KRX:005935) is mulling a move to an offline-only business model. Such a model does not make much sense considering that e-commerce stores offer better deals and discounts to users, but it is believed that several brick and mortar retailers across the country have largely contributed to Samsung’s decision to go offline.

The bid to go offline

There have been significant rumblings in the offline distribution channels over the course of the year as brick and mortar stores have seen their customer base dwindle due to the rise of the e-commerce stores. Several retailers have been vehement in stating that they would refuse to carry Samsung products unless the manufacturer decides to offer them exclusively online. The main reason why retailers are so worried about e-commerce sites is that there isn’t any method to control the prices. For instance, the Galaxy S5 price online in India is $575 (Rs. 35,400) whereas in an offline store it is in the vicinity of $633 (Rs. 39,000).

This led to the creation of a union of sorts called the All India Mobile Retailers Association, which is the coalition of brick and mortar stores from across the country. The stores have banded together to ensure that the price hygiene – the price of a handset across cities and states – stays fixed. Samsung’s incentive in going offline is that it can retain a healthy margin, which an executive has said has dwindled to single digits due to low pricing from e-commerce stores. Samsung met with AIMRA members in New Delhi last month to discuss the move to go offline, and while the South Korean manufacturer hasn’t offered a statement confirming the decision, it is looking likely that its upcoming products like the Galaxy Note 4 will be available only through brick and mortar stores.

The move does not mean that Samsung will cease to sell all products online, as the manufacturer has stated that it will look to offer exclusive deals to e-commerce stores in selling select devices. For instance, the Galaxy K Zoom is available exclusively via Amazon in the country. However, it is unlikely that devices in the Galaxy Note line will be available online in the future. Another contributor must also have been effective pricing: Samsung wants more control on setting the prices on its devices, which it does not have online. By going offline, Samsung can assert more control in terms of pricing its handsets and setting limits on the amount of discounts retailers can offer. We may see this sooner rather than later as the Galaxy Note 4 price in India is claimed to be in the vicinity of around $894 (Rs. 55,000), which is very similar to what the price of the iPhone 6 Plus is rumored to be in the country.

Oddly enough, Samsung isn’t the only one who would be following an offline-only model in the country. Chinese vendor Gionee also sells its handsets exclusively through offline channels in the country, and was quick to quote that it was able to sell 5 million handsets this year. Gionee is making significant inroads into the Indian market by advertising aggressively and maintaining a strong presence at brick and mortar stores.

Samsung doesn’t need to worry about market presence, as its wares are constantly featured in advertisements and billboards. With a total of 48 devices available to consumers across all price segment in the country, the manufacturer offers an abundance of choice. What customers don’t get with Samsung is great value for money, which sums up why the manufacturer is thinking of shifting to an offline-only strategy in the first place.

Turbulent times for Samsung

Although Samsung was the largest handset vendor in the country in 2013, it lost its position to Micromax this year. A combination of lackluster device launches combined with high pricing has led to the South Korean vendor’s shift in fortunes. With the introduction of Motorola’s Moto G, Moto X and the Nexus 5, and the more recent entry of devices like the Xiaomi Mi 3 has meant that Indian consumers are spoilt for choice when it comes to handsets that offer a great set of features at an affordable price. Samsung not only lost out in the mid-tier segment this year, but also in the high-end category as the Galaxy S4 and Galaxy S5 failed to meet the vendor’s sales targets.

Xiaomi has been highly successful in generating a lot of attention for its handsets thanks to its unique flash sale model, which has seen over 40,000 devices being sold in under five seconds. Xiaomi’s devices were also in great demand as the manufacturer was offering hardware that was available for a third of what Samsung was charging.

More recently, Google (NASDAQ:GOOGL) made its move into the entry-level segment with the announcement of Android One, which will serve to further consolidate the market share of local vendors in the country. Samsung is noticeably absent from the list of Android One vendors, and while the manufacturer is set to launch its own offering that targets this segment, it is unlikely it will match what the Android One handsets offer, both in terms of hardware as well as software features.

With the handset vendor losing ground in India as well as other global markets in light of stiffer competition, it remains to be seen whether a move to offline-only sales is a smart choice in the long run. For now, however, it is looking likely that consumers in India have to head to a brick and mortar store if they want to get their hands on a Galaxy Note 4.

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Earlier this month, Google (NASDAQ: GOOG) introduced the Android One platform in India, with three local vendors launching the first generation of Android One handsets. As Google has done with the Nexus program, the search giant is collaborating with silicon vendors and component vendors to create a unified experience across form factors and manufacturers. While the Nexus and the Google Play edition devices are targeted at the mid-tier and the high-end segments, Android One is solely aimed at the entry-level market.

Overview of the Android One initiative

With Android One, Google is offering a turnkey hardware solution to manufacturers, which saves them time and resources in creating a brand new handset. Under the initiative, Google will offer handset manufacturers a list of pre-selected hardware components, which the manufacturers can then choose from. There is no defined rule in terms of hardware, although handset manufacturers are encouraged to include features that are considered essential in the entry-level segment, like dual-SIM connectivity when we’re talking about the Indian market. While manufacturers must meet a minimum hardware criteria, they have free reign when it comes to the design of the handset.

The software side of things will be managed entirely by Google, with no intervention from vendors. The search giant will offer stock Android on all Android One devices, similar to what it does on the Nexus line. Quick rollout of new Android updates has always been a major issue when it comes to local manufacturers, and with Google taking back control in this regard, Android One handsets will be among the first to receive updates to the latest versions of Android. Google has already mentioned during the launch of the handsets that it will be issuing Android L updates to all Android One handsets as soon as it is ready to roll out.

The first wave of Android One handsets include devices from the likes of Micromax, Karbonn and Spice Mobiles, and while internally all three handsets share the same hardware, they all come with a different external design. This, essentially, is the crux of Android One: No matter what handset vendor you choose, you are guaranteed to get a similar experience.

In broad strokes, these devices feature 4.5-inch 854 x 480 screens, 1.2 GHz quad-core MediaTek CPU, 1 GB RAM, 4 GB internal memory, microSD card slot, 5 MP camera, Wi-Fi 802.11 b/g/n and 3G connectivity along with a 1700 mAh battery. They may not be the fastest devices in the world, but Google is not going after benchmark crushing numbers; it is rather focusing on giving the next billion users access to an affordable entry-level handset that comes with a decent set of features. As such, the first batch of Android One handsets cost in the vicinity of $104, which is great value for money considering the hardware they offer.

We say that these are the first wave of devices because Google clearly has bigger ambitions for the Android One platform.

Future growth

During the Android One launch in India, Google announced that while the country was ground zero for the platform, Android One will not be limited to India, and that other countries in the South-East Asian region will have access to Android One handsets by the end of the year. Google touted a host of hardware collaborations with international vendors including HTC, Asus, Acer and others. Notably missing from the list were Samsung, Sony and LG; Google did not mention whether they would be added at a later stage or not, but from the look of things, it seems unlikely as all three vendors have their own offerings in the budget segment.

In addition to international hardware manufacturers, Google has also mentioned that it is bringing silicon vendor Qualcomm into the fray later this year. The addition of Qualcomm is very interesting, as this will be the first time the manufacturer will be offering its SoCs in the $100 segment. Qualcomm recently announced the Snapdragon 210, an LTE-enabled quad-core SoC targeted at the entry-level segment. While Qualcomm has focused its attention in the mid-tier and high-end segments, to an extent that is has an effective monopoly in these areas, MediaTek has managed grab a significant chunk of the market share in the budget segment thanks to offerings like the MT6592, a quad-core Cortex A7 based SoC that was widely available in $150 to $200 devices launched last year and early this year.

The introduction of the Snapdragon 210 changes all that, with Qualcomm aiming at $100 devices with the SoC. It is entirely feasible that Qualcomm makes the Snapdragon 210 available for Android One devices, which leads to an exciting prospect: An HTC designed, LTE-enabled handset powered by Qualcomm for $100. That has the potential to turn the budget market on its head. Whether it actually comes to fruition is something only time will tell, but it is exciting to see how Android One evolves as a platform once it starts becoming available in other territories.

With Android One, Google is offering a great choice to consumers in that they can get a similar experience from different handset vendors. The ability to control the software side of things eliminates a lot of pain points faced by users, and the availability of such features in the entry-level segment will attract a lot of users to make the switch from feature phones in countries like India. The Nexus line has been hugely successful in developed markets, and it looks like Android One will be no different in emerging countries.

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After months of rumors and leaks, the iPhone 6 and iPhone 6 Plus are now official. Boasting screen sizes of 4.7-inches and 5.5-inches respectively, the new devices represent a shift in Apple’s (NASDAQ: AAPL) strategy as the manufacturer seeks to position itself as a viable contender in the large screen segment.

An 5.5-inch iPhone would be much more alluring to consumers in emerging markets like China and India, where the average screen size is at 4.7 inches. A recent survey conducted by market research firm Jana found that consumers in emerging markets like China and India favoured devices with a screen size of at least 5 inches. One reason for high desirability toward a large screen device is that in these markets, a smartphone is often a user’s only gateway to entertainment, with many first-time buyers in India not owning a desktop.

While a larger iPhone is much more alluring, the pricing structure for the device means that it will be out of reach of most consumers. The fact that there are a host of Android-based offerings, from the likes of Xiaomi, Meizu and others, that offer a similar set of specs for a third of the cost means that consumers are more inclined to buy handsets from local vendors than opt in for an iPhone. Samsung already found out the hard way, with the manufacturer losing out its position as the largest selling handset manufacturer in both India China to local vendors. A lack of innovation in terms of design and incremental hardware changes meant that the South Korean manufacturer was dethroned by the likes of Xiaomi in China, and Micromax in India.

Apple has never been associated with pricing, instead building its brand around a premium design and exclusive services, but that is now being offered by other vendors as well. Xiaomi, for instance, has launched its first smartphone with a metallic frame in the Mi 4, and from a design point of view, the device can hold its own when seen against the Samsungs and the HTCs of this world. As for services, Xiaomi has its own platform of services and content that is a great point of differentiation for users looking for something different to the traditional Android user interface. At the end of the day, the pricing will ultimately determine whether the iPhone 6 will do well in the region.

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