LG and smartphones: can the South Korean manufacturer be rescued?

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Not everything is as rosy in the garden for LG as you might think. Despite successful results overall, there are hidden operating losses within the Mobile Communications division. This is not surprising for those who have been following the updates on our website. The latest LG models are struggling to win over users. However, they aren’t all bad. Some elements need to be taken into consideration, all is not lost for the South Korean company in their mobile phone production.

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Following our review on the LG G5, we have dubbed the device a ‘mutant smartphone’. It represented an innovative response to Samsung’s Galaxy S7 with its modular smartphone concept. This phone hoped to experience the same success as the LG G4 but unfortunately, it wasn’t as big a success for the brand as they had hoped. For many, LG is now a brand of the past. The South Korean firm recently showed information on their finances and, even if they seem optimistic for the group, they must be taken with a pinch of salt.

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The G5 is the South Korean brand’s first modular smartphone. © ANDROIDPIT

What is their financial status?

In the third quarter of 2016, LG announced a sales revenue of $11.8 billion and an operating profit of $252.7 million. However, these positive results are the fruit of the excellent performance by the Home Appliance and Air Solution division and the profitability of the Home Entertainment division. If you look closely at the LG Mobile figures, a severe drop of 23 % can be seen in the third quarter of 2015. What’s worse is that LG even registered an operating loss of $389.4 million for this quarter.

This 23 % drop is worrying

This 61 % drop is worrying but an important factor must be taken into account: LG also delivered 13.5 million smartphones during this quarter, and North America had a sales increase of 14 % compared to the second quarter. Is this source of satisfaction enough to save LG from crisis?  

Fortunately, LG is aware of these concerns

It’s always easy to criticize the behavior of others when we aren’t in their position, so I’m not going to criticize LG’s strategy. When finances are in a bad way, there are several options: improve the quality of the product, maintain or increase the pricing to improve profits, lower the price to attract new clients, etc. LG decided to maintain their high prices but to play about with innovative ideas. It’s obvious that this strategy has not been fruitful. Their modular concept wasn’t practical (contrary to the Moto Z) and the quality of their product wasn’t of the same level as their competitors for a metallic smartphone. While a smartphone like the LG V20 is popular on the other side of the Atlantic, LG made the strange decision to not market the device in Europe. Most curious…

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Just like LG, HTC is currently experiencing a similar crisis. © ANDROIDPIT

This crisis is reminiscent of HTC. Nevertheless, LG is more economically resistant and can rely on the success of their other services to compensate for this temporary downfall, just like Sony. Despite some bad statistics, the South Korean manufacturer remains confident and there has been no sign in the press of a sale or transfer of their mobile phone department.  For the year’s last quarter, LG revealed that they are concentrating on increasing sales of the new LG V20 smartphone and the K and X series aimed at the mass market.

LG, aware of their problems, has taken the situation very seriously and re-thought their marketing technique. The company now hopes to finalize the improvements at the end of this year to be better prepared for challenges to come.

Do you think that LG will be able to claw their way back?
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  • Sukant Chakraborty Jan 2, 2017 Link to comment

    LG has not been able to reach the high of G2 again. G2 was quite frankly the best phone of the 2013 and they didn't quite learnt the lessons from it either in manufacturing side or marketing side.
    Also right now the mid range game of android manufacturers like Sony, LG and HTC etc are pathetic. They cannot just compete with apple samsung on the flagship front. They just don't have the brand equity anymore. So to ensure profitability they have to also concentrate on mid range. Some of the biggest phone manufacturers in the world like xiaomi or Huawei have grown on the strength of their mid range phones.

  • Parvind Chahal Jan 2, 2017 Link to comment

    no no never.... LG is not for android smartphones.

  • Jaco Byte Jan 1, 2017 Link to comment

    I currently have my third LG G4 the previous two died after suffering boot loop.

    It's almost upgrade time and here is what I want in a G6.

    Significant camera improvements.
    I want to be able to swap batteries.
    Improved GPS synch
    Longer battery life.
    Finger print scanner
    Improved battery charge
    Improved sound quality.
    No more boot loops

    What I don't care about
    Health sensors
    Wireless charging
    Iris scanners

    Deactivated Account

  • Arshi Khan Jan 1, 2017 Link to comment

    I have owned 3 different iPhone models, owned Motorola and Samsungs too. Also been a user of LG G2, G3 and currently using a LG G4. After iPhones, only LG has satisfied me for its innovative features, its user experience and its hardware quality. Their phones do have hardware faults, but then which brand doesn't?

    I am willing to bet all my chips on LG's flawed "Marketing". Their marketing is what's not at par with their competitors. A good marketing team with a decent budget can turn LG Mobiles around. I am 101% sure about it.

    And LG also needs to start penetrating large and growing markets like India, China, Pakistan and other such densely populated countries.

  •   12
    Deactivated Account Dec 31, 2016 Link to comment

    LG has always been what's wrong with the Android platform with half back bullshit features as well as the useless bootleg copying. Samsung is technology and Android period it's been that way since March 2011 nothing else matters.

  • ljhaye Dec 31, 2016 Link to comment

    I want to like LG but as long as Samsung is doing hardware all of my Android phones will be Samsung.

  • ljhaye Dec 31, 2016 Link to comment

    I find it more than alarming that outside of Samsung most of these Android OEM's make no money from the Android ecosystem. Why is that? Is the Android community as price sensitive as it seems? How many phones would they sell if they priced the phones to make a profit?

    Now I understand how Apple made 102% of all mobile profits last quarter.

    •   13
      Deactivated Account Jan 1, 2017 Link to comment

      Samsung has tons of models yearly. Many different prices to make happy poor and rich people.
      They sell a lot but do not earn much per device.
      Sony tries to do what Apple does. Something like: it's better to sell one per 700,00 than two per 500,00.
      But they forget the fact that in many country people consider iPhone fancy, like driving a Ferrari.
      Android phones are not , no matter how good they can be.

      • ljhaye Jan 1, 2017 Link to comment

        iPhones proves that branding does matter. Sony cannot compete as a luxury brand when its not perceived as a luxury brand. Apple is a luxury brand so its products can command premium pricing unlike Android which is perceived as a budget brand.

  • James Olendorf Dec 31, 2016 Link to comment

    Their phones are great. I always want a new phone but nothing seems so good that I am willing to part with my LG G3. LG could make their phones more desirable by releasing a plain vanilla, non-carrier bloated OS for all their phones. And keep them up to date. If they had this option, like the Nexus phones have, they would see a lot more market share.

  • Mythcyclists Dec 31, 2016 Link to comment

    I have a LG v10 its the best phone I have ever owned. It by far superior to HTC,Samsung, Pixel any of them

  • Alex Simpson Dec 31, 2016 Link to comment

    i have a lg g3 and im hapy with it, it does what it has to do: youtube, whatsapp, web browsing, emulators and a couple of games

    • Austin Kelly Dec 31, 2016 Link to comment

      I'm exactly the same, the screen on my LG g3 is great and I loved the buttons on the back. For me it was a distinguishing feature that I found practical and came to love. Removal of this meant it had no physical difference from competitors, not interested in buying modules.

    • Carmelo Rivera Dec 31, 2016 Link to comment

      Great phone, but it lags and stutters.

  • Andrew Burgin Dec 31, 2016 Link to comment

    Lg as themselves to blame for the bad sales,they join the mobile market in Europe with so many unreliable phones on the "3" Network,so once people find out about this,they will not give any Lg phone a chance,was wasn"t the V20 sold worldwide seems a very odd idea from Lg,2017 might change things round for Lg,if they can make there phones more reliable and cost worthy,will Lg release a Flexible screen phone or not?

  •   13
    Deactivated Account Dec 31, 2016 Link to comment

    Release 1 or 2 basic phones.
    2 mid ranges.

    Bring G Flex 3 as premium intermidiate with snap 660, 5.5 " 2K p-oled display with stereo sound and front speakers. 13/5 mp, 3 gb ram, 32 gb and 3500 mAh.

    G6 with snap 821, 4 gb ram, 64gb, 5.3" 2K LCD, 3300 mAh, ip68, stereo sound, double cam 16/16 mp and 8 mp front. Glass body, usb c, bluetooth 5.0 .

    V30: keep second display, snap 835, 6gb ram, 64 gb, metal body, ip68, stereo sound, oled display 5.7" 4K ( same technologies of their tv) and 4000 mAh.

    Provide updates everywhere... In my country G Flex 2 is 5.0.2, G3 got 6.0.1 in setember/2016

  • Srinivas Dec 31, 2016 Link to comment

    I am not criticising you, but I have a LG G5 too and though I need to shutdown the device to replace the battery, it still is the fastest way of charging the phone which even samsung can't provide and I use it as my gaming machine, playing asphalt-8 airborne, modern warfare, injustice,etc.. never have I felt a glitch in the performance, I don't know what other consumers demand but for me LG G5 satisfies my needs, and that's all that I care about......

    Yeah, it might not have been that successful as mush as the MOTO MODULAR series but it still is a powerpacked phone with a lot different features and design which necessarily needs not to be liked by every consumer....

  • Jack Flom Dec 31, 2016 Link to comment

    I own the LG G5, and it is an amazing phone. Since I have it in a hard case, I don't use the modular feature. Still, the phone is fast, reliable and versatile with a great camera. No complaints, just praise. Proud to be an owner of this phone as well as two great LG TV's.

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