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April 10, 2021

LG Electronics Quits Smart Phone Business As Samsung Takes Over

LG Electronics Quits Smart Phone Business As Samsung Takes Over

LG is getting out of the “incredibly competitive” business of making smartphones. On Monday, the South Korean tech giant announced that it would close down its mobile phone unit after years of losses, marking the end of an era for a trailblazer in the Android world.

The division is expected to be wound down by July 31, although the company may continue to sell some of its existing models after that, according to LG Electronics.
The “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,” the company said in a statement.
LG was once one of the world’s top smartphone makers, even making the top three back in 2013, according to research firm Strategy Analytics.
But the company’s devices have since dwindled in popularity, particularly as Chinese upstarts such as Xiaomi and Oppohave surged around the world. As of last year, LG was no longer even among the top seven players globally, according to Counterpoint Research, even though it is still the third most popular smartphone vendor in the United States, after Apple (AAPL) and Samsung (SSNLF), according to market research firm Canalys.
“LG leaves a ‘small vacuum’ of global market share of under 2%,” Neil Shah, a partner and vice president of research at Counterpoint Research told the press.
That space will likely be filled by Samsung in both South Korea and the United States, as well as some smaller players, he predicted.
LG had already warned about the fate of its phone business in January, saying that it was looking at all options, including a potential sale of the unit.
The decision to call it quits on Monday was met with an outpouring of nostalgia on social media, where users shared photos of their first LG phones and reminisced over the company’s willingness to innovate.
“Pour one out for LG Mobile. They’re the reason we have [ultrawide cameras] in every new phone right now,” Marques Brownlee, a tech reviewer and video producer, wrote on Twitter. (LG’s V40 phone has been widely credited with introducing the feature to smartphones.)
“They didn’t always ace every phone, but losing them means losing a competitor that was willing to try new things, even when they didn’t work,” Brownlee added.
Austin Evans, a tech video blogger, noted that “LG were never perfect but in a world of boring slabs they delivered some of the most unique phone designs, ideas and features ever.”
LG was known for pushing the envelope with its smartphones. In 2013, it came out with a curved smartphone screen, making it one of the first electronics makers at the time to debut the technology for the mass market.
Two years later, the company wowedexperts with the high-end photo-taking capabilities of its LG G4. CNN Business’ former tech editor David Goldman opined it “might be the best smartphone camera on the planet.”
And last year, LG unveiled the WING 5G, a 5G-enabled smartphone that came with two screens. One of the screens could rotate up to 90 degrees, with the aim of letting users toggle different apps at the same time and multitask more easily.
The company’s last big splash came just three months ago when it revealed a phone that could be rolled up to turn into a tablet.
LG said at the time that the device would launch sometime this year, though the company confirmed to CNN Business on Monday that it won’t now be released.
“For years, [the] LG smartphone was known for its unconventional and innovative features,” Shengtao Jin, a research analyst at Canalys, told CNN Business. “While these features helped LG differentiate itself from other mainstream brands, most consumers did not find much practical value in these features.”
But the firm won’t crash out of the industry entirely. “Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G,” it said in the statement.
“Core technologies developed during the two decades of LG’s mobile business operations will also be retained and applied to existing and future products.”
Experts believe that this decision may help the company in the future. LG will enjoy better growth prospects overall once it does away with the mobile business, said Shah, who described the move as “removing the thorn” from the company’s “feet.”
“It would be wiser for LG to cut the loss and place the bet on areas that it has an advantage in, such as the display business,” Jin added.
LG Electronics’ stock closed down 2.5% in South Korea on Monday following the news.