On 5th April 2021, the South Korean company, LG Electronics revealed the news of the shutdown of its smartphone sales and production. This is disheartening to see that one of the first-ever smartphone brands to launch in the market has to retreat its steps. For a long time, the LG Electronics smartphone division was struggling to survive in the market as the consumer base decreased drastically and they found it hard to find a buyer anymore. So, the company has finalized the decision to completely ending its smartphone sales and production.
As the company has decided to shutdown the production across the globe, it will leave its 10 percent share in North America. In the North American market, the two main company’s dominating the smartphone markets are Samsung and Apple’s mobile phones. The existing users of LG will either choose Samsung or Apple for the next choice. But, according to some analysts, the existing LG customers are more likely to choose Samsung over Apple as the price range especially the mid-range products have more varieties in Samsung.
Loss in LG’s Smartphone Division
It is unfortunate that LG’s smartphone division has been facing recurring losses for quite some time. In the past six years, the total loss suffered by LG’s smartphone sector has summed up to $4.5 billion. With the increasing competition in the market especially with popular mobile brands like Samsung, Apple, Xiaomi, and many more LG’s product lines got lost in the myriad. Thus dropping out from the smartphone market is a wise choice made by LG as now the company can invest more in electronics, home appliances, and electric vehicle components. LG has a good market when it comes to choosing smart devices for the home.
LG’s smartphone division wasn’t always like this. In 2013, LG’s smartphone was at peak of its business as it brought some good smartphone models with exquisite features to the market. LG was one of the early companies in the smartphone business to bring features like wide-angle cameras to its smartphones. During its accelerated growth, it was the third-largest brand after Samsung and Apple in terms of the largest smartphone manufacturer.
What caused the Downfall?
After LG smartphones reached their peak sale, the company slowly started witnessing a stiff decrease in buyers. The most important reason behind this is receiving slower software updates and most of the flagship products faced both software and hardware mishaps. Today, we can see how fast and often we receive regular updates on our mobile phones. The OS receives regular updates, as well as the options, have also increased. Due to a lack of such strong vision and lack of marketing skill, LG failed to survive in the long run.
With the advent of Chinese companies like Honor, Oppo, Vivo, and Xiaomi, many companies which used to be a hit even a few years ago have started struggling. Some of the companies whose sales have fallen greatly are Nokia, HTC, and BlackBerry. If we look at the statistics, Samsung shipped 256 million phones last year whereas LG shipped only 23 million. (Reuters) This shows that the company was barely surviving the competition.
Other companies will Benefit
Though Samsung will benefit greatly in the absence of LG from the market, other Chinese companies will also witness an increase in sales. The main reason behind this is that the Chinese companies don’t have a very dominating business in the United States due to rivalry between Beijing and the US, especially in recent times. But, in the case of Latin America, the Chinese smartphone business is expected to boom now that LG has completely disappeared. The company is expected to totally shut down the mobile sector by 31st July of this year.
In South Korea, the employees in the smartphone division will be shifted to other LG sectors but at the local level in other regions, this will bring uncertainties in employment. In spite of shutting down the smartphone division, LG will retain the 4G and 5G core technology patents. It will also provide service support and updates to its existing customers for a certain period of time
Annasha Dey is an NIT student, who apart from studying engineering is also a content writer. She has a great interest in photography, writing, reading novels, and travelling as well. She is a foodie who loves socializing and hanging out with her friends. She is also a trained Kathak dancer and a big fashion enthusiast. Dey also loves watching TV series, which includes F.R.I.E.N.D.S. and Big Bang Theory. To be a better writer she prefers to read more