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Reason Why LG Electronics Focus on Low-end Smartphone Market?
Losing Competitiveness
Reason Why LG Electronics Focus on Low-end Smartphone Market?
  • By Cho Jin-young
  • December 23, 2016, 02:15
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LG Electronics will launch its new mid-range K-series smartphones next year to expand sales of budget smartphones after it failed to secure the popularity of the G5 released this year.
LG Electronics will launch its new mid-range K-series smartphones next year to expand sales of budget smartphones after it failed to secure the popularity of the G5 released this year.

 

LG Electronics Co. is aiming to increase its business showings in the smartphone market with low and middle priced products. This is because the company will not be able to improve performance unless it expands sales in the low-end market as Samsung Electronics and Apple have already become the two biggest players in the high-end smartphone market and Chinese smartphone makers, including Huawei, have improved rapidly in technology.

In particular, LG Electronics is now forced to actively carry out its strategy to expand sales of budget smartphones after it failed to secure the popularity of the G5 released this year.

The company announced on December 22 that it will launch its new mid-range K-series smartphones next year. It plans to unveil four new K-series smartphones – the K3, K4, K8 and K10 and the Stylus 3, which comes with a stylus pen, at the CES 2017, the world's largest annual trade show to be held in Las Vegas in January next year. Pricing has not been announced yet but they are expected to be priced at around 300,000 to 400,000 won (US$249 to 332). Some models will be available at 200,000 won (US$166).

LG Electronics also unveiled the 2016 K-Series smartphones at the CES 2016 held earlier this year but there were only two models – the K10 and K7. The company has decided to add three more models in the series next year.

The reason why LG Electronics is releasing budget smartphones early next year is to increase sales by expanding its dominance in the low and mid-priced market. The company also suffered from poor sales of budget models this year as sales of the G5 flagship smartphones, which was launched with great expectations, were lower than expected. Accordingly, some experts say that the mobile communications (MC) business division will post more than 1 trillion won (US$830.22 million) in operating loss this year.

In fact, according to Counterpoint Research, a market research firm dedicated to deliver in-depth intelligence of information and communications technology, the smartphone shipments of LG Electronics 13.5 million in the third quarter this year, down 1.4 million from the same period a year ago. The figure is also continuously decreasing. 

LG Electronics shipped 14.9 million units in a quarter on average last year, but the quarterly average shipments from the first to third quarters this year reduced to 13.7 million. It was more than a 1 million decrease.