LG’s Mobile division has not had the easiest time of it recently. 2010 was a tough year, with the division posting a loss for the first time in four years in Q2, followed by further losses in Q3 and Q4.
The Korean giant was hampered by its decision to delay entering the smartphone race and instead concentrate on producing feature phones, albeit quite sophisticated ones.
But Western Europe and the UK in particular fell for high-end smartphones big time and LG got left behind.
Smartphones provide better margin if they attract customers in sufficient numbers and LG suffered from both declining revenues in developed markets and lower average selling prices.
However, LG knew it had to fight back with some attractive high-end smartphones and made the decision not to cut back on R&D. We are now starting to see the results of that investment in the new Optimus range and the as yet unveiled tablet device.
The Optimus One has sold over a million worldwide and at the CES show in January, LG showed off the Optimus 2X and Optimus Black. These DLNA-enabled devices are designed to home in on the mobile and TV convergence market. And coming up is the world’s first 3D phone, the Optimus 3D.
As we report this week (see page 1) LG is also considering whether to make its mobile arm independent of the LG Electronics division. The advantage is that it will allow the division to be more agile and responsive within its individual geographic markets. Then again, if convergence with TV is a key driver for LG, it might make more sense to keep it aligned within the Electronics division.
LG has a tough fight on its hands to persuade developed markets to abandon their love of Apple, HTC, BlackBerry and Samsung in particular for high-end smartphones. The growing popularity of Android will help, but it remains to be seen if its latest devices will appeal in large numbers or whether services such as DLNA and 3D are just seen as more of a gimmick.