boAt Lifestyle sets focus on 2021 to come out stronger from COVID-19 outbreak, says co-founder Aman Gupta
Back when crowds were still a thing, boAt headphones were really popular. During my commute to work, I saw a number of people with boAt headphones in Mumbai’s extremely crowded local trains. The company is so popular that it is not just another audio gear brand, it’s a phenomenon in its own right. The popularity has resulted in the brand creating a cult following, often referred to as boAtheads. It is difficult to build a company that makes hardware products.
boAt Lifestyle not only makes hardware but has proven that it can succeed. In all probability, those people are now using their boAt headphones indoors. The reliability, cost and ease of purchase has been such distinguishing factors that boAt customers tend to repeat purchase from the company. This unparalleled growth was very well reflected in the recent report from IDC. According to the research firm, boAt ranked No. 1 in the earwear segment in India in 2019.
Focus on 2021 to get away from COVID-19 outbreak
Aman Gupta told me that the company is focusing on 2021 as the year is now moving away from his hands due to the pandemic. Tech industry has seen a lot of visionaries who have weathered tough times. Steve Jobs brought back Apple from the verge of bankruptcy. Satya Nadella recently made Microsoft cool again. Lisa Su, CEO of AMD, has shown that it is not playing second fiddle to Intel. This isn’t the story about the meteoric rise of boAt to become the leading earwear brand.
In fact, this story is an attempt to look at what comes next for this thriving company. Like tech leaders mentioned above, Aman Gupta is weathering a big challenge, one that was not really on the horizon a few months back. On the phone call, he directly acknowledged the switch to focus on the product roadmap for 2021. “Right now nothing to do just marketing things and planning for next year,” he said acknowledging that it’s been boring for him to stay away from product action.
The tech industry and manufacturers, in particular, are looking to find a wiggle room during the second half of this year. Aman Gupta wants to stay sharp and focus on a period that will be more under his control. “We get worried with what’s happening in the market and looking at where stocks are moving and recession fears,” he said during the call. “It’s a scary situation but I hope we come out stronger,” the optimist in him continued.
Starting a hardware company and sustaining it has been an uphill task. Even Andy Rubin, the co-founder of Android, could not keep his new hardware company Essential ticking in the cost conscious market. In comparison, boAt Lifestyle is very much an upstart. It has built a business model around lean manufacturing philosophy and one where consumers are the only king. The company has delivered premium products that don’t come with a huge premium in terms of cost.
Reliance on China for manufacturing and supply
In order to balance the cost and product efficiency, boAt relies extensively on China. It is the place where boAt headphones are made. The easiest way to describe would be that boAt headphones are designed in India but assembled in China. The boon of rapid manufacturing also became the bane for this company. As soon as China commenced lockdown, boAt stopped getting shipments and when China started its recovery phase, India began lockdown. As a result, boAt says some of its products planned for the first half of this year remain stuck in China.
He explained on the call that the company did not see any kind of disruption in supply from China during December last year or in January of this year. In fact, it was business as usual for them even during Chinese New Year celebration from January 15 to January 31. The reality stuck in February when the disruption really. “Now, China is fully open but India is fully closed,” he explained on the call. “Everything is getting manufactured but what is happening is we cannot take deliveries because of the lockdown,” he added.
While the situation remains difficult in business terms, Gupta also noted how relationships remain stronger. During these difficult times, the company continued to support its manufacturing partner in China. Now, boAt’s partners are paying back by displaying stronger relationships. He says the Chinese partners offered to help with sourcing critical items such as smart thermometers but getting deliveries remains a challenge. While pandemic and supply constraints remain a challenge, boAt Lifestyle sees consumer spending as the real threat.
Product and People First Approach
Aman Gupta told BGR India that when the lockdown gets lifted and economic activity resumes, people won’t immediately be spending like before. This is a looming threat and one that economists have been alerting governments around the world. “There will be a little time for people to get back to normal. It will not happen where the market will suddenly shift even even if all goes well,” he said. “There is a negative sentiment in the market along with recessionary fears. People want to save things and conserve things,” he further explained.
For boAt Lifestyle and its eccentric co-founder, the priorities are set. Instead of focusing on a phase which remains unpredictable, they are setting focus on the year ahead. What does it mean for boAtheads? Well, you will get to buy boAt headphones as usual once the country lifts the lockdown. Aman also explained that the business was not particularly great before the country went into lockdown. He says the business spike happens towards the end of the year, especially the fourth quarter. As a result, boAt was not significantly affected by the lockdown in China and lockdown in India.
COVID-19 lockdown has also shown the ugly side of this industry. With sustainability coming under question, tech companies are laying off employees faster than ever before. boAt Lifestyle, which is an operation comprising a small team, is taking a different approach. For starters, the co-founder told me that there are no layoff or furloughs being planned. “I personally feel that our company does not hire and fire fast. We didn’t hire too many people and are a sustainably strong company,” Gupta said. “We don’t burn money, we earn money,” he added. For the time being, boAt Lifestyle plans to hand out paychecks as usual without any cut. However, it does not plan to hire any additional workforce till the time this situation gets better.
Sustainable business model
The common theme coming out of the conversation was how this four year old company has built a fundamentally strong operation to sustain this crisis. However, the situation is far worse for smaller companies. Gupta mentioned that if COVID-19 had struck last year then it would have been difficult for them as well. “Bigger brands will sail through this much faster than smaller brands,” he observed.
One of the cardinal rules I follow while writing about any product is understanding the intent of the brand and the target audience. When I was reviewing the boAt Airdopes 201, the thing that stood out the most was intent of the device. It was clear that the product was aimed at a community of users. It was not about bells and whistles features but rather about delivering experience. Aman Gupta told me that the company is primarily catering to a customer base that already owns boAt headphones. “Our product is excellent and coupled with outstanding marketing, that is what is the secret to our success,” Gupta adds.
For boAt, the challenge is not just the outbreak of this pandemic. It is also seeing new competition from established brands like Samsung. The South Korean company has introduced a new range of audio products called Infinity under its AKG brand. Aman Gupta notes the product philosophy is identical to that of boAt. While he is wary of the product, he does not see the market as one where the winner takes all. “We are not the cheapest Indian manufacturer of headphones. We are competing in the premium price product category.”
He says competition keeps the company on its toes but it is not getting paranoid or complacent about it. With a niche following for its brand and room for growth, the company is focused on the next lineup of products. It is already a big player in the wireless audio market and fancies a big play in the true wireless market as well. In fact, boAt sees duopoly as the next big thing among consumers. By duopoly, I mean having more than one headphones. Gupta sees an industry where consumers will buy wired, wireless and true wireless headphones for different use cases.
Future Product Roadmap
As a result, the company wants to ensure that customers stick with the brand and don’t move away to its competitor. boAt says 20 percent of its sales comes from wired headphones while the remaining comes from wireless and true wireless segments. With the TWS segment catching up in a big way, the company sees an opportunity to become a leading player in that space as well. One of the ways that boAt can become a leader in the true wireless earbuds market is by relying on Qualcomm’s newest chipsets. These chipsets are designed to bring noise cancellation to wireless earbuds.
Aman Gupta says that consumers are already aware of this new chipset and want them in new products. boAt will definitely launch new audio products with the aforementioned Qualcomm chipsets. For Aman, the goal remains as simple as adapting to consumer demands and offering better products than his rivals. He adds that true wireless earbuds are not even 5 percent of the market and has huge room to play. “TWS is an early mover game right now and will become mainstream in two years,” he quipped.
Technology is the biggest enabler in the world that we live in right now. After talking to Aman Gupta, it became clear that technology can make lifestyle better for a lot of us. When it comes to audio, boAt Lifestyle wants to be at the forefront of that change. While the COVID-19 outbreak has been a big disruption, the company sees it as a minor roadblock. It wants to come out of this situation stronger and more focused towards boAthead community. Only time will tell what it comes next but it is definitely inspiring to see a young tech company try to change the narrative in the industry.