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Telecommunications equipment industry

LG Struggles to Catch Up in Smartphone Market

Strategic Insights

— 1 min read

Despite introducing its first smartphone globally last year, LG Electronics Inc. continues to face challenges in the rapidly growing smartphone market. The company's failure to woo consumers, who are often drawn to the likes of Apple Inc. and Samsung Electronics Co., has resulted in significant losses. LG's operating losses at the handset division reached 718 billion won ($625 million) in the year to June, compared to Samsung's 5.7 trillion-won profit in the same period.

Key Takeaways:

  • LG's market share in the global smartphone market is 13.5%, a significant decline from 38.1% in the previous year, according to research company Strategy Analytics.
  • The company's latest smartphone, the Optimus LTE, has a display sharper than the iPhone's, but its image is still perceived as a laggard in the market.
  • LG is cutting back on less-profitable models, but its strategy seems to be focused on releasing multiple models in the hopes of striking gold, according to analyst Woo Chang Hee.
  • The company is betting on 3-D technology in mobile phones, a feature Samsung and Apple don't offer, and has introduced a 3-D phone this year.
  • LG aims to narrow its full-year net loss at the mobile-phone division to 270 billion won in 2011, compared to the 654 billion won loss a year earlier, according to analyst estimates.

Statistics:

  • Global smartphone shipments in the second quarter: 18.5% Apple, 15.2% Samsung, and 13.5% LG (Strategy Analytics, July)
  • LG's operating losses at the handset division: 718 billion won ($625 million) in the year to June
  • Samsung's profit at the same period: 5.7 trillion won
  • LG's market share in the global smartphone market: 8.4% (July)
  • Apple's jump in market share since the previous year: 4.8%
  • LG's loss of market share since the previous year: 5.6%
  • Net loss at the mobile-phone division (estimated): 270 billion won in 2011
  • Net loss a year earlier: 654 billion won

Sources:

  • "LG Electronics' Won-Selling Losses in Handset Unit," Bloomberg News (July)
  • "LG's Mobile Phone Weakens Handset Unit," Yonhap News (July)
  • "LG Unveils New Smartphone with Sharp Display," The Korea Times (October 10)
  • "LG to Report Q3 Earnings This Week," I Media LLC (2011)

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