LG will shift focus to mid-level handsets in 2009

LG will move away from top-end, high-specification handsets in 2009 to focus on mid-range phones that can be given away for free on low-end tariffs.

The manufacturer’s head office in Seoul expects mid-range handsets to be popular in Western European markets as well as emerging countries.

LG said it will be ‘more competitive’ with a sales target of over 10 million units globally next year. It also hopes to raise its market share amid the growing economic downturn from 8% to 10% in 2009.

LG will move away from the crowded premium end of the handset market, which is one that neither operators nor the price-conscious consumer appear particularly interested in.

As a sign of things to come, LG currently has a cheap touch-screen, the Cookie (£100 on prepay), and the KS360 (£80 on prepay) – a QWERTY keyboard phone. The manufacturer’s UK marketing manager, Jeremy Newing, added that there will be a big push on the KS360. The phone is favoured by operators as it appeals to young customers on a budget who are keen to use data services like Facebook and instant messaging.

Nokia, Samsung, Sony Ericsson, Apple and BlackBerry are all competing hard to produce top-end handsets. Some within LG feel that the manufacturer does not have a strong enough brand to compete toe-to-toe with big names in what is a shrinking market.

LG re-evaluates 2009 growth

LG plans to generate half of its sales from high-end phones next year, while mid-tier and low-end phones will take up 30% and 20% respectively.

LG’s handset president and chief executive, Skott Ahn, said growth would slow noticeably and added that the manufacturer’s average growth rate of around 30% would slow to only ‘slight’ growth next year.

LG sold 23 million phones in the third quarter of this year, down from a record 28 million in the second quarter. The manufacturer’s operating profit margin on handsets has been steadily falling – from 16% in the first quarter to 14% in the second quarter and 12% in the third quarter.