How NOISE Built a 4000 Crore Rs Wearable Brand - Startup Case Study

Summary

Indian company Noise, founded by cousin brothers Gaurav and Amit Khatri, rose to become the world's third-largest smartwatch maker in 2023, behind only Apple and Samsung. Starting as a phone-cover company, Noise capitalized on the smartphone revolution in India. Recognizing the potential of smart-wearables, they pivoted in 2016 to smartwatches, offering affordable options with high utility. Despite initial challenges, Noise's strategy of listening to customer feedback and focusing on health-conscious features during the COVID-19 pandemic led to significant growth. However, they now face competition, product commoditization, and over-reliance on smartwatches. To address these, Noise is investing in R&D, marketing, and manufacturing, aiming to innovate and maintain their market position.

Takeaways

• 🌏 Noise became the world's third-largest smartwatch maker in 2023, trailing only Apple and Samsung.
• 🚀 Founded only seven years prior, Noise achieved this feat as a bootstrapped company, unlike many other established brands.
• 🛠️ The company started as a phone-cover business, pivoting to smartwearable technology as the smartphone market evolved.
• 📈 Noise identified a gap in the Indian market for affordable, high-quality smartwatches and capitalized on it.
• 💡 The co-founders, Gaurav and Amit Khatri, leveraged the trend of stylish phone covers to launch Noise 1.0, achieving rapid sales growth.
• 🏭 In response to the smartphone revolution in India, Noise set up a local factory in 2014, becoming the market leader for phone covers by 2015.
• 🔄 Recognizing the commoditization of their phone cover business, Noise transitioned to smartwatches to maintain differentiation and brand value.
• 📊 The wearables market was burgeoning globally, and Noise saw an opportunity in India, where the segment was nascent.
• 💼 Noise faced initial challenges with their first smartwatch, learning from customer feedback to improve future products.
• 📈 Despite the COVID-19 pandemic, Noise's focus on health tracking features in their smartwatches led to increased demand and market share.
• 🏆 By 2022, Noise had become a global brand, but faced new challenges such as increased competition and the need for innovation to avoid commoditization.
• 🔧 To address future challenges, Noise is investing in R&D, exploring new product categories like smart rings, and enhancing its manufacturing capabilities.

Q & A

What was the significance of Noise becoming the world's third-largest smartwatch maker in 2023?

Noise's achievement of becoming the world's third-largest smartwatch maker in 2023 was significant because it was only behind Apple and Samsung, despite being a relatively young company that started only seven years prior, compared to other companies that had been in the industry for decades.

How did Noise start its journey in the consumer electronics market?

Noise started as a phone-cover company, identifying a business opportunity when Gaurav Khatri, one of the co-founders, realized the demand for iPhone covers in India, which were not readily available locally.

What was the turning point for Noise to shift from phone covers to smartwearable products?

The turning point for Noise was in 2017 when Gaurav and Amit, recognizing the lack of differentiation and high competition in the phone cover market, decided to explore new product opportunities and identified the growing smart-wearables market.

Why did Noise decide to manufacture smartwatches in India, and what were the initial challenges?

Noise decided to manufacture smartwatches in India to tap into the growing market for smart-wearables. The initial challenges included setting up a supply chain and manufacturing process for a product that was new to the Indian market, requiring partnerships with tech companies in Taiwan and China.

What was the strategy behind Noise's smartwatch offerings that contributed to their success?

Noise's strategy was to offer smartwatches with more utility at an affordable price, making them accessible to the average Indian consumer, and differentiating themselves from existing fitness bands in the market.

How did the COVID-19 pandemic impact Noise's business, and what was the resulting market trend?

The COVID-19 pandemic disrupted supply chains for many businesses, but for Noise, it led to increased demand for smartwatches as people became more health-conscious. This resulted in a spike in the demand for smartwatches in India.

What challenges is Noise currently facing in the smartwatch market?

Noise is facing challenges such as intense competition with over 80 companies now making smartwatches, the risk of product commoditization, over-dependence on smartwatch revenue, and customer complaints regarding product quality and after-sales services.

How is Noise addressing the issue of increased competition and product commoditization?

Noise is addressing these issues by investing in aggressive marketing, such as securing Virat Kohli as their brand ambassador, and focusing on research and development to create innovative products like the smart ring.

What is the significance of Noise's in-house manufacturing initiative, and how does it aim to benefit the company?

The in-house manufacturing initiative is significant as it allows Noise to control product quality, leverage the Make-in-India image, reduce manufacturing costs, and increase gross margins, ultimately giving them more control over their product and supply chain.

What is the potential of the smart ring market, and how does Noise plan to capitalize on it?

The smart ring market is estimated to grow significantly from 147 million dollars in 2022 to 1.4 billion dollars by 2032. Noise plans to capitalize on this growth by entering the market early with their smart ring, Luna, and creating a new product category similar to their strategy with smartwatches.

How did Noise's partnership with Bose impact their strategy in the wireless earphones market?

The partnership with Bose allowed Noise to raise their first-ever investment round, which is crucial for them to become a key player in the wireless earphones market, currently dominated by Boat, and increase their market share from the existing 7-8%.