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Indian smartphone manufacturer Micromax is launching a new online-only brand YU through newly formed subsidiary YU Televentures.

It has tied-up with the maker of the Android-based CyanogenMod ROMs mobile operating system, and is expected to launch its first smartphone under this brand in December this year. Micromax mentions that it along with Cyanogen will be partnering several companies to build a layer of services on top of the operating system.

Why YU?

This seems to be an attempt to counter Xiaomi’s Mi series of affordable smartphones, for which the Chinese company has also adopted the online-only distribution model. Xiaomi’s flash sales-based marketing strategy has succeeded in attracting a lot of attention towards the brand. Motorola had also adopted a similar distribution model for its Moto G series of smartphones, earlier this year. While Finnish smartphone maker Jolla is the latest company to have launched its devices exclusively online.

According to an IDC report, Micromax holds a 18% market share in the Indian smartphone market (as of Q2 2014), second only to Samsung which has a market share of 29%. However, if feature phones are taken into consideration the difference in market share between Samsung & Micromax is very little. Samsung still leads with 17% of overall mobile handsets, while Micromax has 14% share. Cost is still one of the major decision points for Indian consumers.

Chinese smartphone manufacturer OnePlus, which launched its first smartphone OnePlus One in April this year, is also expected to enter the Indian market in December this year . Its smartphone also runs on CyanogenMod dubbed as CyanogenMod 11S and features a 5.5 inch full-HD display, quad-core Snapdragon 801 processor and 13 megapixel camera among others. Earlier this month, OnePlus had also appointed Vikas Agarwal as the general manager of OnePlus India.

Importance of online tie-ups

Earlier this month, Lenovo India Director (Smartphones) Sudhin Mathur told Medianama that if they had launched the phone offline customers in major cities like Delhi, Mumbai & Bangalore would have been the only ones with immediate access. Customers in tier-II, tier-III & tier-IV towns would’ve had to wait, as it takes time for products to reach retail outlets in those centres.

He also said that online platforms allow companies to reach out to a targeted net savvy audience that understands what they want to buy. Plus, e-commerce platforms allow users to actually compare products based on what’s being offered at what prices due to their neutral nature and take an instant decision. More on this here.