LG’s exit from the smartphone space: Factors that led to the downfall and the consequences for the consumers and the industry

by Mayank
Featured

“Life’s good when you play more”

The quote above was taken from a television advert for the LG G5 modular smartphone. This quote can be thought of as the article’s synopsis, without the unfortunate consequences, which you will learn about later in the article.

LG is finally quitting the mobile market, leaving behind a history of producing exceptional smartphones for over two decades.

This was confirmed when LG’s official blog dropped a post on April 5, 2021 confirming the ongoing rumors.

Those of you who follow mobile news and rumours are probably not surprised by this. LG has been in decline for over 5 years, and last year they reported an operating loss of about $750 million.

In this post, we’ll look at some of the amazing inventions that LG introduced to the smartphone industry (spoiler alert: the list will impress you) as well as deeper perspectives into the events that lead LG to leave the smartphone business behind.

Contents

What has LG achieved in its two decades of smartphone manufacturing?

To say that LG has been at the forefront of innovative smartphone features is an understatement. In reality, LG was the first to introduce many of the features we all take for granted these days. Here is a list of LG smartphones that introduced a new technology to the industry.

LG Black Label Series (Popularly known as the Chocolate Series)

You are right if you believe the Motorola Razr V3 from 2004 is the best-selling clamshell phone in the world. During its lifetime, it sold about 130 million units.

LG’s Chocolate series of phones, which included seven models couldn’t break the numbers similar to Motorola but this series was still a huge hit for LG. The series was launched in 2006. The most popular phones in this series were the LG KG800, KE800, and LG VX8500 slider phone.

LG sold more than 15 million units as a result of these three devices by December 2007.

LG KE850 Prada

This phone was launched in January 2007, and it was the first phone to have a capacitive touchscreen—a feature that is now used in any smartphone. This phone’s sales were quickly overshadowed by the introduction of the first iPhone, owing to the iPhone’s superior software and features.

LG Prada

Fast forward a few years, and the LG KU990 Viewty was the first smartphone to record slow-motion videos, and LG sold 5 million of those.

LG was on the way to become one of the world’s leading handset manufacturers by 2012, but they were unable to do so. This year was also significant for LG, as they transitioned from the Symbian OS to Android on their smartphones.

LG G2

The LG G2 from 2013

The LG G2 was released in 2013, and it had several features that are now common on modern smartphones. It was the first smartphone to have the double tap to wake functionality (called the knock-knock feature), as well as an OIS camera sensor.

LG G3

A snap from the LG G3 Launch Event highlighting the Quad HD display of the G3

The G2’s successor, this handset was released in 2013 and featured the first 1440p display in a smartphone as well as one of the first 4K capable cameras with laser autofocus. In 2014, this phone sold 10 million units. The Samsung Galaxy S5 from the same year sold significantly more units.

LG V10

This phone came with a 32-bit DAC. Audiophiles absolutely loved this feature, which remained on LG devices until their departure in 2021. This phone also had the world’s first ultra-wide selfie camera, which was a popular feature as well. You may be familiar with the latest generation iPhone 12’s robust stainless steel build. Guess what? The V10 from 2015 had one of the first stainless steel phone bodies.

LG G5

The LG G5 was released in 2016,. This phone followed in the footsteps of its ancestor by including an ultra-wide camera on the back.

You may be familiar with the Moto Z’s ability to support mods that allow you to do some crazy things. The LG G5 also had a modular design, similar to the Moto Z.

LG Wing (2020)

The last phone from LG (assuming, correctly, that there would be no rollable phone from LG) was a nostalgic device with a futuristic twist. It was based on the LG V9000, which appeared in the first Iron Man movie. The Wing is made up of two displays mounted on top of each other- a 6.8-inch P-OLED display and a small 3.9-inch small OLED display.

The LG Wing from 2020

You can switch the larger screen to landscape mode and watch movies while texting or taking notes on the smaller screen.

The LG Wing smartphone heralds the end of a period of mobile innovation from LG.

Why is LG choosing to leave the phone industry?

The official reason from LG on stepping down from manufacturing smartphones is “to 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, as well as platforms and services.”

LG has been a leader in innovation in the field of smartphones, as shown by the preceding section. These developments however, necessitate a significant investment in R&D.

LG Electronics, the company’s main smartphone business, has made significant investments in R&D. All of this research, however, did not result in profits for the Korean brand.

According to the most recent Statcounter data, LG’s global smartphone market share is less than 2% as of February 2021. Even newer brands, such as Realme (an Oppo subsidiary), have surpassed LG in terms of market share.

Source: StatCounter Global Stats – Device Vendor Market Share

So, as it turned out, LG has been suffering a massive loss, and in their best efforts to keep alive, they were unable to compete in the extremely competitive smartphone industry.

Deeper Insights into the downfall of LG Smartphones

There was a quote from the 1996 documentary series that stated “As usual in the PC business the prize didn’t go to the inventor but to the exploiter of the invention.

This statement, I believe, applies to this article because LG was the inventor and the exploiters were the different brands that controlled the smartphone market.

LG came up with brilliant designs ranging from a self-healing phone (The LG G Flex) to curved phones. The problem was that these features were great for a small group of enthusiasts who knew how to use them.

Consider the LG V10, which featured a 32-bit DAC for immersive audio. LG also included AKG headphones with the package. Audiophiles loved it, and their excitement was expressed in sales.

However, ask any ordinary smartphone user if they would pay a premium for the LG V10’s immersive audio.

I am sure most of them would say No.

It is not new that companies that focus on a small group of enthusiasts eventually fail. Here are a few illustrations of smartphones that died: Red Hydrogen One, Nextbit Robin, and The Essential Phone

Some phone manufacturers, such as OnePlus and Xiaomi, anticipated this and devised sales plans accordingly.

The OnePlus Way

The OnePlus One’s most popular feature was that it used a free community-built Android firmware from Cyanogenmod, making it the first phone on which tech enthusiasts could root and install custom ROMs, experiment with different kernels, and install the Xposed module, to name a few.

The OnePlus One was titled the “Flagship Killer” when it was launched.

OnePlus quickly realised that relying on those features and a niche geek culture would not result in earnings. As a result, they gradually shifted away from the feature-specific market and towards creating a complete overall device lineup that everyone can use and enjoy every day.

How Xiaomi keeps the balance

Xiaomi, on the other hand, has struck an ideal balance between the quirky designs favoured by enthusiasts, such as the Mi Mix lineup, and their profit-generating flagship models, such as the Mi Note series.

The Mi Mix Fold. Credits: Mi Official Blog

For the majority of users, the true mobile experience stems from a decent software experience and a better long-term value for the price.

LG deliberately struggled to deliver in terms of software and UI, owing to a poor track record of Android upgrades, and they couldn’t simply make a decent phone that would cater to customers. They were also unable to sell the capabilities and value of their smartphones. This proved to be the primary cause of their demise.

Will there be another “LG” in the smartphone business?

LG’s departure from the smartphone market means that another potential source of innovation has been lost. No other company these days goes out of their way to work on something different, and there hasn’t been any major discovery in smartphones in a long time.

This may be okay for the time being, but in the long run, it would have a negative effect on every other brand. This is because consumers would stop purchasing a new phone if their existing handset will do the same tasks as a new phone. This, in essence, would have an effect on brand revenues because users will not upgrade their phone for at least 5 years.

As a result, brands must ensure that their phones have at least one distinguishing attribute that will entice a potential buyer.

While manufacturers such as Samsung, Oppo, and TCL are concentrating on new concepts and prototypes, they will struggle to fill the innovation void left by LG in the market.

Conclusion

LG has been a pioneer in emerging smartphone technology and holds several patents for its projects. They couldn’t compete, though, because they relied on sales from their enthusiast-focused phones and couldn’t strike a balance between creativity and demand.

Perhaps LG would have done much better if it had made decent overall phones and sold them to regular customers while still focusing on R&D for new concepts, as Samsung does.

LG would be sorely missed with all of their inventions and incredibly genius ideas that have evolved into essential features for smartphone users.

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