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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