LG Electronics is ready to operate an internal corporate venture system. This seems to be an attempt to boost its profits and seek new breakthroughs amid sluggish smartphone sales.
According to electronics industry sources on Oct. 25, LG Electronics Mobile Communications (MC) Division has decided to foster in-house venture companies, and encouraged its executives and employees to propose ideas. The company plans to provide initial capital and incubating programs to ideas selected in the in-house review board.
Also, LG Electronics will host a “Hackathon” to develop Android Wear apps, Google’s operating system for wearable devices, for two days from Oct. 31. Hackathon, a compound word of hacking and marathon, is a contest that continuously develops ideas during the time appointed and builds a prototype or output.
It is a way to seek innovative and fresh ideas for global information and communications technology (ICT) companies, such as Google and Facebook. The fact that LG Electronics tries to secure its competitiveness in the software industry through the Hackathon corresponds to the company’s decision to push ahead with new projects, including the in-house venture promotion system.
LG Electronics will choose 15 teams from general applicants, such as developers, planners, and designers who are interested in developing Android Wear apps, and help them to develop apps.
Currently, the company needs a new breakthrough in the mobile business. As sales of its new strategic model “G4,” which was launched early this year, fell short of expectations, LG Electronics posted only 200 million won (US$177,305) in operating profits at its MC division in the second quarter. It means that the company failed to make money even after selling products. In addition, it failed to compete on equal terms with Samsung and Apple, and struggled with Chinese manufacturers.
Samsung Electronics already created an internal corporate venture system from 2012 before LG Electronics. The Creative Lab, which is simply called “C-Lab”, is the key example.