LG's Smartphone Business in Doubt

Concerns are mounting over the fate of LG Electronic’s smartphone business, as it has been staying at the number five spot in the global market three quarters in a row. There is even speculation that the local company’s handset business will be caught up to by Chinese companies that are close on their heels.

According to the industry on May 14, based on the global smartphone market share data published by global market research firm Strategy Analytics, LG Electronics, after losing its number three spot to Chinese companies during the third quarter last year, has been at number five until the first quarter of this year.

The company’s biggest problem is its declining smartphone market share.

The local handset giant has been seeing its market share drop since last year’s second quarter, which stood at 5.2 percent, to this year’s first quarter at 4.3 percent, while its Chinese counterparts such as Huawei and Lenovo’s market shares are either rising or maintaining a similar level.

Chinese companies snatched the number three spot during the third quarter last year. At that time, LG rolled out its strategic smartphone “G2”, the best fruits of the company’s unsparing efforts. In Feb. this year, it launched a big-screen smartphone, the “G Pro 2”. However, neither of the two strategic phones were a global success, failing to bolster the local company.

To make it worse, other Chinese companies Xiaomi and Yulong are chasing right behind LG with market shares of 3.9 percent and 3.7 percent during the first quarter, respectively.

Also, global smartphone market share data released by another market research firm International Data Corporation (IDC) produced the same result saying that the company sank to the world’s 5th since the third quarter last year.

It seems as though LG Electronics, once a rival with Samsung Electronics and Apple, is being ousted from the premium market while being taken over by Chinese companies in the mid to low-priced market.

Their business environment this year is not looking rosy either. It is because China’s Lenovo rose to number three by buying Motorola.

Lenovo is planning to capitalize on massive Chinese domestic demand and to zero in on other markets such as Europe on the back of Motorola.

The Chinese smartphone giant set its smartphone sales goal at 100 million sets by 2015.

Samsung Electronics’ goal this year is to sell 330 million sets. LG Electronics’ smartphone sales last year barely breached the 50 million mark, meaning that its comeback to the number three spot will not be easy.

An industry observer said, “Basically, LG Electronics should compete with Chinese companies over the number three spot, but there are hefty marketing costs as well as a challenging business environment, making it possible for it to get kicked out of the top five.”