Lava dials up ambitions for smart wearables market

With the recent launch of smartwatches, home-grown smartphone maker Lava is looking to secure a strong foothold in the Indian wearables market.

The company aims to capture up to 20 per cent of this segment over the next few years, according to a senior executive.

“We decided to enter the wearables segment because there are many synergies between our core smartphone business and wearables, from the supply chain and manufacturing to design and research and development (R&D).

"This strength extends across sales, distribution, and customer service,” Sunil Raina, executive director at Lava, told Business Standard.

The company primarily operates in the sub-Rs 30,000 smartphone market and is now vying for a larger share in the sub-Rs 5,000 wearables segment.

“In the next couple of years, we aim to achieve a market share of 10-15 per cent in the sub-Rs 5,000 wearables segment,” Raina added.

This comes as India’s wearable device market has declined for the first time, dropping 10 per cent year-on-year (Y-o-Y) to 29.5 million units in the second quarter of 2024.

The first half of 2024 saw a 4.7 per cent decline, with 55.1 million units shipped, according to data from the International Data Corporation.

Analysts note that original equipment manufacturers are struggling to attract customers due to limited innovation in new models.

Additionally, vendors are cautious about inventory, focusing on clearing old stock before the festival season begins.

Despite the market downturn, Lava believes there is ample opportunity.

To address the innovation gap, the company is investing in R&D to offer higher-quality products.

Currently holding a low single-digit market share in wearables, Lava will focus primarily on the sub-Rs 5,000 category.

The company believes its “customer-first” approach will enable it to gain substantial market share in the near term.

“We are adopting a completely customer-first strategy.

"By meeting customer needs, our share will naturally increase

"In 2024-25, we aim for a threefold increase in market share and revenue compared to the previous year for our wearables business,” said Satya Prakash Sati, business head of accessories at Lava.

Lava has been developing smart wearables over the past two years, starting with audio products before launching its first smartwatch in April this year.

“When we analyse the market landscape, we see a huge need for improvement in available products.

"With our 15 years of experience in this category and deep understanding of the Indian market, we believe we can compete against current players,” said Raina.

To enhance margins, especially in the sub-Rs 5,000 segment, wearables companies often use cheaper components, leading to lower product quality and higher return rates.

“While some companies are performing well, most have failed to meet consumer expectations in terms of product capability, quality, and customer experience,” Raina added.

As the market matures, Raina expects that consumers will be more willing to pay a higher price for quality products, leading to a market rebound.

Lava was one of the first smartphone brands to begin manufacturing in India and currently operates a smartphone manufacturing facility with a capacity of 42 million units.

Having full control over its localised value chain, Raina says, provides the company with a competitive edge.

According to Sati, the company is working on high-end chipsets for a seamless consumer experience and plans to integrate artificial intelligence into its upcoming smartwatches.

“For the audio category, we are focusing on delivering higher-quality active noise cancellation than what is currently available,” Sati said.

Ahead of the festival season, Lava plans to launch a broader portfolio of wearables, including two new smartwatches and one audio product.

Additionally, the company aims to capture a larger share of the smartphone market. In 2023-24, Lava’s smartphone business grew 250 per cent Y-o-Y, making it the fastest-growing brand in the Rs 10,000-20,000 segment.

“For a long time, Indian consumers have sought a domestically-made option that combines high technology with a great experience.

"We expect our smartphone sales to grow by at least 150-200 per cent this year and plan to double our sales,” Raina added.