It is official, South Korea’s LG Electronics is withdrawing from the smartphone market. Though the company was one of the pioneers in the smartphone industry, LG has been losing to its competitors. Accordingly, the dismissal of smartphones from LG will result in a major structural reorganization in the company.
LG: the wrestle with the smartphone market
LG was one of the most innovative companies in the smartphone market. The South Korean company was the first to introduce ultra-wide-angle cameras. Its peak in 2013 took LG as the world’s third-largest manufacturer with Samsung and Apple as its strongest competitors. LG is comparably withstanding well within other renowned mobile brands such as Nokia, HTC and Blackberry which have long left the industry.
Software and hardware mishaps in its flagship models, however, dragged LG’s reputation down. Slower software updates didn’t help the company pull its name back up. Moreover, LG also suffered from analysts’ critics for the company’s lack of expertise in marketing in comparison to its Chinese rivals.
Quoted from Reuters, Ko Eui-Yong of Hi Investment & Securities noted, “In the United States, LG has targeted mid-priced – if not ultra-low – models and that means Samsung, which has more mid-priced product lines than Apple, will be better able to attract LG users”.
However, it is rather difficult to dismiss LG’s smartphone division’s loss. For the last six years, LG recorded a total of $4.5 billion dents in the business. Additionally, Reuters noted that LG’s global share only amounts to about 2%. Last year, LG only shipped 23 million phones compared to Samsung’s 256 million exports. Accordingly, by being the smallest division out of the other four, LG’s smartphone division only accounted for around 7% of revenue. It is also expected to wound down by July 31.
These became major concerns for LG, which further led to the final decision to dismiss the smartphone division. Instead, LG will be focusing on electric vehicle components, connected devices and smart homes growth, the company said in a statement.
LG prepares for a new start
To adjust to the new structure, LG is planning on reorganizing several things. First of all, LG will be reallocating its employees of the smartphone division in South Korea to other LG Electronics businesses and affiliates. According to Reuters, other decisions on employment will be made at the local level.
Though LG is calling an end to its smartphone business, the company still plans to continue on its 4G and 5G technology. LG reportedly is trying to retain its 4G and 5G core technology patents, including core R&D personnel. With these two components, the company will commence with the development of communication technologies for 6G. Whether or not LG will license out such intellectual property in the future, however, is still undecided.
In the meantime, LG will be providing service support and software updates for its current mobile products’ customers. Support and updates will vary depending on the region.
Read also: Experiencing Bakcruptcy, LG to Quit Smartphone Business?
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