Now it’s official. After the signals a few months ago, LG announced yesterday that it will stop producing smartphones. The main cause is the business line losses recorded in the past five years. “LG’s strategic decision to exit the telephony sector – reads a note – will allow the company to focus more resources in other growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business solutions together with platforms and services ». In short, LG will continue to leverage its expertise in the field of mobile telephony and to develop technologies related to mobility such as 6G, to help further strengthen its competitiveness in other business areas. It was specified that “the currently available LG smartphones will continue to be sold, as well as customer support and software updates are guaranteed for a certain period of time, based on the geographical area”.
The reasons for the crisis
In the last five years, LG has made losses in the smartphone sector of approximately 4.5 billion dollars. The decision that LG could take is therefore not only a direct one of the economic slowdown induced by Covid-19 but the result of an increasingly competitive market such as mobile telephony. In the third quarter of 2020, LG would have sold only 6.5 million smartphones compared to 7.2 in the same period of the previous year, landing on a market share that according to Counterpoint did not exceed 2%. In a moment, however, that sees the turnover of this very rich segment in decline (Gartner certified three quarters with a minus sign in 2020) waiting for an elusive acceleration stroke linked to 5G technologies.
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The errors of Lg
LG wanted to play the card of innovation and creativity in a market that is increasingly the same, apparently interested only in camera innovation and less in design. Its mobile phones have always tried to invent something new, from the cross-shaped Lg Wing smartphone to the modular one to the super stylish Lg Velvet. His mistake was to have chased giants like Samsung and Apple on a terrain, that of technology that few can afford and that today has entered into crisis in favor of so-called mid-range models on which the powerful manufacturers have got their hands. Chinese like Xiaomi and Oppo. It is precisely on this band that LG has not withstood the competition of Chinese brands. And on the higher one, the undoubted creativity didn’t make up for the lack of quality (and marketing). LG has never invested as much as its rival Samsung which – Gartner data – in the third quarter confirms itself as the first manufacturer in terms of market share followed by Xiaomi, Huawei, Apple and Oppo with 8%. Under them many little ones who struggle to stay upright. Just as it happened for Lg.