Bengaluru-based Creo offers an operating system that promises unique features and frequent updates.

Many gadget freaks would love to get a new smartphone every month, loaded with new apps and features.

Creo, a Bengaluru-based start-up which develops operating systems (OS) for phones, launched a smartphone which promises to deliver by adding new features and updates every month.

Creo, formerly known as Mango Man Consumer Electronics, was founded by Sai Srinivas, Kiran G and Shubham Malhotra in 2013.

Its first product offering was Teewe, a HDMI media streaming device which has several features that differentiate it from competitors like Google Chromecast.

Creo launched its first phone, Mark1, in January. 

Creo raised $3 million from Sequoia India, Beenext Ventures and India Quotient in January.

Sequoia and India Quotient had pumped in Rs 11 crore in March 2015.

The start-up is backed by angel investors like Kavin Bharti Mittal, Pavan Ongole of Bharti Soft Bank; Arun Seth, former British Telecom employee and Palaash Ventures.

"Sequoia invested in Creo because it felt users deserve a better Android experience than they get today," says Shailendra Singh, managing director, Sequoia India and a principal investor in Creo.

The start-up aims to join the niche group of global firms that produce smartphones and develop proprietary software (OS) themselves. Its Fuel OS provides regular updates every month.

"In the current market scenerio, while hardwares are getting better by every passing day, there is no such breakthrough on the software front. We want to be the ones who can bridge the gap," said Sai Srinivas.

"In the crowded smartphone market every Android phone delivers the same. We want to come up with features every month that improve the users experience and offer powerful functionality," said Srinivas.

Its Mark1 smartphone, launched on Flipkart, comes with features like Sense, Retriever and Echo.

Sense is a feature which searches keywords across the apps, while Echo transfers calls to voicemail if a phone is left unattended for 30 seconds. Retriever comes handy when a phone is lost or stolen.

The company claims the phone has done well but, refused to share the number they have sold.

Creo's developers will take feedback from its users to determine what will be included in each month's updates.

The start-up also plans to credit every feature to the people who suggest it. It has opened 300 service centres across the country. 

How does Creo plan to compete with the big brands?

''About 50 per cent of the Android system is held by OEMs who have very little software capability. We know exactly how an original equipment manufacturer (OEM) goes about making a phone. The control panel for Fuel OS will offer a lot of control to the OEMs," says Srinivas.

Revenue model

Creo will make bulk of its revenues from its OS, which allows it to monetise their phones in different ways.

 ''The only way an OEM makes money today is through margin on the hardware sales. Using Creo's OS, handset makers can make recurring revenues every month," said Srinivas.

The company plans to lend its OS to other OEMs in India and across the globe on licence.

It also wants to expand its market to Southeast Asia by the end of this year and after that to Africa and South America.

Road ahead

Creo plans to tie-up with other handset makers to install its OS on their phones in a month or two.

It is also working on allowing users to download the OS on their phones. But, why would handset makers adopt Creo's OS?

''OEMs may prefer making a safe choice, considering the shrinking margins on hardware most of the top phone makers today are keenly looking to achieve two things on their devices - differentiation and monetisation," says Srinivas.

Its unique features would help them build their brand and suggest ways to monetise service revenues. Srinivas claims Creo's OS can help phonemakers address these pain points.

"The challenge that Creo faces is educating the users, convincing them of advantages of the OS and build a trust for the brand," says Srinivas.

EXPERT TAKE: Ashish Taneja 

The smartphone market is huge and highly competitive. A plethora of options are available but for a smart/ savvy user, it's only noise and no quality.

Creo's full stack approach (device and OS) is interesting.

However, a phone like Mark1 would appeal more to the tech savvy user with strong preference for the OS over aesthetics.

Most users now move from one phone/ brand to another faster than you can think of.

The start-up should concentrate on the niche users and focus on loyalty/advocacy by delivering what the users expect.

The mantra of a new phone every month could really work if it can deliver.

Over time, Creo should look to develop new products that appeal to the same target group and have a wider portfolio. 

The company should focus on creating campaigns around the feature/ functionality, which a user could relate to and should stay away from competing with the established brands on price/ quality.

Initially, the price needs to be a killer. Creo should have perhaps kept the price shade lower and offered premium specifications.

Ashish Taneja is co-founder, growX ventures, an angel investment firm.