As usual, it does not look good for LG’s telephone division. As reported by The Korea Herald, LG Electronics CEO Kwon Bong-Seok sent out a note to all staff that the company is considering making major changes to the smartphone division, including possibly quitting the smartphone business.
Last week, Korean news outlet TheElec also wrote about this note in a post that has now been deleted. The post was deleted because LG brutally discouraged the report, calling it “completely false and unprofitable.” This week, LG basically confirms the same note report from the Korea Herald, complete with comments from LG. The Verge also got a thumbs up from LG about the report.
“As competition in the global mobile device market intensifies, it’s time for LG to make a cold assessment and the best choice,” an LG official told the Korea Herald. “The company is considering all possible measures, including the sale, withdrawal and downsizing of the smartphone business.”
LG’s smartphone business has suffered for a while. As the report points out, LG’s smartphone division lost around 5 trillion won ($ 4.5 billion) in the last five years. The official earnings count has the division of 22 consecutive lost quarters. Today, you will not find LG on a “Global smartphone market share” chart; instead, it is buried in the “other” category. In the US, Counterpoint has LG in 13 percent of the market, mainly due to prepaid sales.
LG Electronics’ CEO first got the position 13 months ago, and has undoubtedly evaluated LG’s only money-losing division in the last year. In an interview in January 2020, shortly after being named CEO, Kwon promised “LG Electronics’ mobile business will be profitable by 2021.” It is still not clear whether this is considered a reasonable goal for the company.
TheElec’s original scoop is backed up and translated here. You should definitely take it with a grain of salt since the socket deleted the post and is not behind it, but so far it seems to be correct. It contains an interesting treat that is not in the second report: that LG announces a direction for its mobile device on January 26. TheElec also claimed that LG issued a directive to “stop all development except the i-project”, with “in project” is a code name for LG’s flexible screen LG rollable smartphone. The last bit of the report sounds very likely when it increases the possibility that the LG brand will never really leave the smartphone market, and instead will produce the logo of various ODM companies.
Why would anyone buy an LG phone?
LG has never had a solid sales figure for the smartphone war. At the high end of the market, LG has always seemed to be overshadowed by its bigger Korean rival, Samsung. It shipped high-specific phones with heavy Android skins and a poor update schedule, and when Samsung offers the same with greater brand recognition, why should anyone choose LG? At the low end of the market, especially in the United States, the company has reliably shoveled cheap, anonymous phones into carrier stores and the prepaid market. This is something that needs to be done, but again, there is nothing here that makes LG stand out from the crowd.
If anything, LG has a pretty bad reputation when it comes to building smartphones. The company’s phones are known to die early and go into “boot looping”, a useless Android error condition where the phone restarts repeatedly due to poor flash memory. LG was sued for start-up loops in 2017, with the lawsuit naming each high-profile LG device released in 2015 and 2016. LG ended up arranging. I know that I have personally added four LG-produced Google Nexus 5Xs to rest on boot loop issues.
When the company did not occupy the same path as Samsung, it trotted out ridiculous gimmicks that would be forgotten a year or two later: it was the LG G5 with modular accessories, like a clip on camera grip; the inexplicable banana-shaped LG G Flex; and an obsession with various “dual screen” designs such as the LG V10’s warning display, the LG V50’s second-screen clip and the LG Wing’s “T” shaped design. You may see the company trying to do something different to stand out, but none of these ideas were there good, or at least they were not a hit with consumers.