LG, the technology giant, has voted to pull out of the highly competitive mobile phone sector marking the end of an era. While some optimists who believed that the company would revive its segment were taken, by shock, the others, who were well aware of the segment’s continued downfall, saw this move coming. A series of unfortunate events coupled with LG’s failures led to this announcement.

LG the pioneer

LG had often missed the spotlight it truly deserved. The company launched the first all-touch UI and a captive touchscreen phone. But, was overshadowed by Apple, which entered the market with the first iPhone. Its inventions were mainly focused on its camera. They were the first in the market to launch dual and ultrawide cameras.

LG was often ahead of its times. It came up with the first widescreen aspect phone – much ridiculed at the time, now found in every typical phone. The company also holds the Guinness World record for being the first mobile phone with dual processors. LG has played an integral role in shaping the current mobile phone market, through its myriad innovations. These achievements make us wonder why did the segment incur losses?

Well, a simple answer- LG failed to capitalize on its ideas.

Jack of all trades, master of none?

In 2014, LG made a record for its company by shipping for more than 12.3 million smartphones in the first trimester. Its range of smartphones catered to the needs of all segments of society by making phones of all price ranges. Reports claim that LG was once among the top 3 mobile brands of the world.

A series of events faltered the impulse and led to the downfall of the company. The first big blow to customer reputation was when LG’s flagship phone, G4 experienced boot loop issues. The device went on never-ending reboots which led to a lot of complaints that weren’t resolved even after replacements. LG had to go through a class-action suit. The company tried to dramatically alter things to regain its lost reputation with its next flagship phone G5, by making a wager on modularity. Auxiliary fittings that could be attached to the phone were introduced but the functionality was limited and the feature did not do well in the market. It failed to garner a positive response from the customers. The company also failed to provide important updates on its devices on time. This delay led to customer dissatisfaction. The fact was acknowledged by the company multiple times.

LG Handset and Smartphone Business
Image: Counterpoint-Research-LG-Handset-and-Smartphone-Business

Gaps in marketing

LG also fell short in advertising as compared to its competitors. Samsung, Apple, and other brands have often roped in famous personalities and have come up with the quirkiest ads to linger in the minds of the customers. I, for one, fail to remember the last LG mobile phone ad that affected me. Marketing is the basic tool to highlight your product and grab the attention of the masses. The company failed to do so, and sadly publicity cannot handle the burden all alone.

Pricing the right way?

LG never compromised on its pricing and continued to sell its flagship phones at exorbitant prices even after diminishing sales. With Apple and Samsung already creating a niche for themselves in the premium segment, the entry of Chinese brands such as one plus, oppo, and Vivo which flexed multiple features at lower prices closed the chapter for LG completely. LG’s inability to differentiate itself from the competitors and justify its pricing with refreshing features raised only one question in the people’s minds. Why do we even buy this?

Image: Candytech; Smartphone Market Share Q3 2020

The final exit

LG was always adventurous on its expeditions. It continued to take risks in this highly competitive market. But its innovations failed to move the masses which led to slower sales. The out of the box innovations might have attracted the early adopters but they were not enough to get the segment going.

LG Global Smartphone Market Share

There were speculations that the company has been looking for buyers for its mobile phone segment. But the deal doesn’t seem to have closed. After nearly six years of continued losses adding up to 4.5 billion dollars, the company has finally decided to wind up its mobile phone segment which had now come down to only 2% of the total market share. “LG’s strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence, and business-to-business solutions, as well as platforms and services,” the company said in a statement.

Image: Counterpoint-Research-LG-Global-Smartphone-Market-Share

Consequences

The companies exit won’t have much effect on the Indian market since LG India’s mobile phone segment was valued at just Rs. 90 crores as compared to its combined valuation of Rs, 15,709 crores in the FY 2019-20. Though the company enjoyed a 10% market share in the United States and this exit would directly benefit companies like Samsung and Apple.

LG will continue to maintain an inventory of a few existing models and shall provide system updates and other necessities as and when required. The company will also keep its adventurous spirit alive by continued development in mobility technologies like 6G to support its other segments while being competitive. With this news, LG has now become one of the first major players to exit from the field.