Interview: Lava's route from featurephone dominance to smartphone player

Indian handset maker Lava currently operates in 40+ countries and is aiming to take the fight to the Chinese makers, which dominated the Indian market. We sat down with Mr. Tejinder Singh, Product Head, Lava International, to talk about the company"s current position and future plans.

Mr. Tejinder Singh, Product Head, Lava International

Mr. Singh talked about the innovations brought by Lava to its users, and the challenges Lava faces as an Indian brand. You can read the full interview below.

What"s Lava"s current positioning in the Indian smartphone market and phone market in general - in terms of market share and actual numbers?

There are two categories. One is the featurephone category where we are No. 2 in India and No. 3 globally. Second category is smartphones, where we are consistently growing our market share. We are close to a market share of 3% in the segment we operate. And what we have done over the past couple of years is invested consistently in the R&D and worked towards developing customized features and providing the right software experience to the consumers. In smartphones, our journey is still work in progress.

Earlier we had this problem of perception that Indian brands have a tendency to sell the device and then forget the consumer. So we worked significantly towards it. We follow a policy of one major Android upgrade and two years of consistent software updates, which include security and bug fixes. So we have worked in this direction, and we are already seeing some positive results.

But what we believe is going to be a long term journey in which we will have to deliver consistently not only in hardware, but also in software, and once we do that, our market share in smartphones will grow rapidly. And if I have to give you a specific illustration, like we gave the Android upgrade for our flagship model Agni recently. The security patches we are giving consistently every quarter and we are also working on developing some exclusive features. Recently we launched the Blaze 5G that has YouTube playback in the background, which on the competing devices requires a YouTube Premium subscription.

We also came up with a concept of MyZ that enabled both hardware and software customization. The ZUp program lets you upgrade the hardware post purchase - say you bought a 2GB RAM device and you want to upgrade to 3GB - that was made possible. So this is our direction that we have to work consistently towards improving this hardware and software experience.

Some part of journey is already covered and hence some results are there. The rest will be covered in the subsequent years as we are consistently investing in the R&D and growing our R&D capabilities and hopefully, the positive results will follow in the subsequent years.

What innovations is Lava most proud of and which bits you see as key to differentiating from your competitors? What can we expect in the future?

We believe is that we shouldn"t do innovations for the sake of innovation. We have clearly defined our target customer, who is in the age group of 18 to 24 years. He is most often a male student, and all our innovations are focused towards this target consumer. The customer research told us that other music applications support background playback, but have limited songs. So we discussed with our R&D and we came up with the YouTube background playback feature.

Similarly, a large set of customers wanted the facility of anonymous call recording and isn"t available in the current Google OS suite. So, we then discussed with our R&D team how we can provide it and brought it to our phones.

Another key features born by consumer feedback are MyZ and ZUp. Consumers wanted to be able to select the best configuration for them without paying for features they don"t need. And we came up with this concept in which you can select which components you want. So, if you want 6GB RAM with an 8 megapixel camera that option is there. So, that was the entire concept of MyZ.

This is about our past innovations. If we talk about the future we are strengthening our consumer research team and consistently hiring from the top institutes. We have product team members who can bring the insights from the consumers. We are focusing very heavily on the expanding the R&D capability so that we can deliver the innovations, and our innovations will be mostly focused towards the key necessities of smartphone users which are related to performance and camera.

I cannot disclose the exact details of the innovations that are work in the progress, but in the coming time, you will see these innovations which are related to the core needs of the smartphone consumers, which are performance and camera. Some of the features that we will bring will be unique features for this set of consumer. And when I say this set of consumer, I basically mean the consumer in the price segment of less than $150.

What kind of R&D capabilities Lava has right now?

Lava has built the capability to design the phone from scratch in India only. So if you have to design the phone, you need the industrial design team, you need the mechanical design team, and then you need the hardware team and a software team. We have all these four teams, which we have hired from the Indian Institutes, and we have the capability to develop the entire smartphone starting from the scratch, and this is the reason why we are able to bring the innovations and provide the regular updates and also the major Android upgrades.

Currently, we have an approximate R&D resources in the range of 80 people and they have different kinds of skills and experience related to hardware, MD, ID, software, which they utilize to deliver the smartphone as per the need of Indian consumer. Other than the human resources, we also have the equipment related to the camera infrastructure, audio infrastructure, and reliability and quality. So, all that infrastructure has been set up by us to ensure that we are able to develop the device end-to-end in India only.

So are Lava smartphones entirely made in India?

Actually they are made in India there is no doubt in it. So, there are two processes. One is the components that are brought in depending on the supply chain ecosystem. Some of the supply chains are in China, some are in different countries, and some are in India also. All these come to the Lava factory and we have the capability of SMT in which the components are mounted on the PCB and we prepare the PCBA.

Then there is a separate process of assembly. All this is done within the Lava factory, and we have consistently worked on improving the capacity. Currently we have four lines of SMT and roughly seven to eight lines of assembly.

You can say that all our smartphones are made in India, although some components are sourced from the different countries since their ecosystem is not there in India. But on that front also we are consistently working towards localization, like previously, we were importing the display from China, but now we are working towards sourcing it locally, and in one of models we have taken the display locally. So that work is consistently going on to localize more components and ensure that majority of the components are sourced from India only.

You"ve got a big presence in the feature phone market, but that segment"s days are clearly numbered - are you confident you"ll be able to retain the customers when they transition to smartphones?

Yes, we are very confident that we will be able to retain this customer base. Actually this is one pillar of our strategy. We roughly have a base of about 40 million consumers that we can move towards Lava smartphones over the next five years’ time as the transition from featurephone to smartphone market will happen.

Why we say so is because the featurephones again are completely designed in India and that is why we are able to control the failure rate. The failure rates are very low - like in decimal points - and the customer satisfaction is very high.

In featurephones, the life cycle are very long, like three to four years, and when a device is able to deliver consistent performance for three to four years, there is a certain brand trust, which develops.

What we have learned from our market understanding is that there is a high entry barrier for the customers in the rural areas, so entering into their life is difficult. But once you have entered their life and you deliver the right performance, then you can continue to enjoy the loyalty. Loyalties are higher in this segment, and that is going to be our one pillar of strategy to move this feature phone base to our Lava smartphones.

On the smartphone side, do you plan on moving beyond the entry-level segment and maybe joint the battle in the mid-range?

Okay so, as the market ASPs are going up, we are also consistently working towards moving our ASPs and year-on-year, we are improving our ASPs. Having said that, the major play is still under the INR 15K segment, with one flagship model in the range of INR 15K to 20K, and next year you will see further increase in the ASP from our side. But we want to do it gradually, because we believe sustainable growth is much more important than short term burst.

What will be the focal points when designing your next phones? Is it going to be camera, display, battery life, or something else entirely?

The customer segment we are targeting is youth, and our research has told us that the biggest need and the pain point of consumer is performance. So the big key point that we are going to focus is going to be performance, followed by camera and design, because the consumer is fairly satisfied with battery life from a 5,000mAh battery.

However we"ve noticed that in some segments there is demand for fast charging. That is a different demand, but consumers are fairly satisfied with the battery life from a 5,000 mAh battery.

The display quality in the entry-level segment is HD, which isn"t ideal if you compare with FHD, but consumers are ready to make that compromise. However, performance, design, and camera are aspects the consumers don"t want to compromise with. Hence, these are going to be the focal points for us.

How hard is it for an Indian handset maker to compete with Chinese and Korean rivals, and how important is the Made in India program for your competitiveness?

It is challenging, but it is also exciting, and how we see this is that now, we are the only one representing India because other Indian brands have almost left the market. So we carry the hopes of 1.3 billion people that there should be an Indian brand able to provide the mobile devices. So I will say it is challenging, but it is an inspirational challenge, and this is how we see it.

Related to the Made in India program, under the government PLI scheme, the Indian brands get benefit in the sub-$200 segment. So that is a benefit for us as we have applied for the same and we are part of that program. The PLI program is a big help from the government to the Indian brands.

Do you plan on pursuing wider international availability, and what would your next steps in that regard be?

Yes we are pursuing international expansion. Recently we acquired a company in Latin America by the name of "bmobile." That acquisition was solely to speed up our international expansion. That is also one agenda that we are driving. But our key focus market will remain India for the next couple of years along with the growth in the India market.

There will be growth in the international market also, but the core market is going to be India. And the next steps for that are investing in both the consumer research and R&D to provide the products that are proudly Indian and every Indian can be proud of.

We will focus on investing in R&D in the subsequent years to lead by the product because we believe we understand the Indian consumers in a better way, especially in the segment in which we are working.

How long do you think it will take for Lava as an Indian brand to reach the level of its Chinese and Korean rivals and be a well-known brand at the global level?

I will divide this. If you will say within the segment that we are working, say less than INR 20K, then this journey can be traveled in next one to two years. It is possible if we are able to execute our plans of extending the R&D and working on consistently improving the product. However, improving the ASPs further and going to the higher ASPs is going to be a long-term plan, like a five-year plan.

Can you tell us something about Lava"s upcoming smartphone?

We are planning to give another device for the 4G consumer at an affordable price point. Its focus is going to be performance and we will be using a MediaTek G Series chipset.

Anything else you would like to tell our audience?

I would like to tell the audience that they should buy Lava devices, and I"m pretty sure whatever the doubts they have in their mind related to the Indian brands in general will be cleared. They will have a very different experience since we have built the product in a very different manner compared to other Indian brands. That is why we are able to still sustain in the competitive market.

We don’t believe in selling the device and then forgetting the customer. We work consistently towards improving the customer experience during the lifecycle by providing proper updates, upgrades, and bug fixes. So that is going to be a big difference which an Indian consumer will find.

I can tell all the Indians that Lava is surely a brand they can trust and they can be proud of. Lava"s phones are made by Indian engineers and they can be proud of this work being done in India.