Company is losing out to Apple, Samsung as it struggles to woo customers
LG Electronic’s new Optimus phone sports a display sharper
than the one on Apple’s iPhone and its chip puts it on par with Samsung
Electronics’s newest Galaxy. Gwon Soo Seok, 23, still isn’t won over.
“LG’s image is that of a laggard,” said Gwon, a student in
Seoul who is leaning toward an iPhone or a Galaxy. “LG seems to have good
technology, but Apple and Samsung are the cool ones,” said Gwon, who stopped
using devices made by Seoul-based LG, the world’s No. 3 phonemaker, three years
The failure to woo consumers like Gwon leaves LG at a
disadvantage to Apple and Samsung in smartphones, the fastest-growing segment
of the $207bn mobile-phone industry. LG had 718 billion won ($625m) in
operating losses at the handset division in the year to June, compared with a
5.7 trillion-won profit in the same period at Samsung.
“LG was slow to embrace the smartphone market, and they are
still having a hard time correcting the mistake,” said Lim Han Eui, a
telecommunications consultant at ROA Consulting in Seoul. “There has been
nothing particularly special about their phones. They need to develop their own
color and identity.”
LG, whose panel unit supplies the “Retina” displays used in
the iPhone, introduced its first smartphone globally last year, more than three
years after the debut of the Apple device.
Apple, based in Cupertino, California, accounted for 18.5
percent of global smartphone shipments in the second quarter, compared with
13.5 percent a year earlier, research company Strategy Analytics said in July.
Nokia dropped to third place, falling behind Samsung after
its market share shrank to 15.2 percent from 38.1 percent.
Including basic phones, Nokia remained the world’s biggest
handset maker with a 24.5 percent share, followed by Samsung at 20.5 percent
and LG at 6.9 percent, according to the researcher.
“They’ve been behind the curve and are constantly playing
catch-up,” Annalisa Di Chiara, a Hong Kong-based senior analyst at Moody’s,
said of LG. “The question, really, is whether they will ever catch up on the
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The company is aiming to stem losses and convince investors
a turnaround is possible. Koo Bon Joon, the younger brother of LG Group’s
chairman, took over last year after his predecessor Nam Yong quit, taking
responsibility for failing to come up with a model to counter the iPhone.
The maker of Chocolate and Prada handsets is cutting back on
less-profitable models, Park Jong Seok, head of the mobile business, said in
July. More than 12 new models have been unveiled this year, under the Optimus
LG showcased the Optimus LTE in Seoul on Oct. 10, touting
its 329 pixels-per-inch screen compared with the iPhone 4S’s 326. The chip has
a 1.5 gigahertz processor, the same as Samsung’s latest Galaxy model.
LG has the strength in technology for next-generation mobile
devices such as the long-term evolution model, said Ken Hong, a Seoul-based
spokesman. The latest phone is capable of running on faster networks using the
so-called LTE technology.
“Time is ripe for us
to put that into action,” he said. “The Year 2012 is going to be a
significantly different scene from now.”
The company is also betting on 3-D technology in mobile
phones, a feature Samsung and Apple don’t offer. It introduced a 3-D phone this
year and plans are in place for more, said Jeong Ok Hyun, head of LG’s research
Full-year net loss at the mobile-phone division may narrow
to 270 billion won in 2011 compared with the 654 billion won loss a year
earlier, according to the average of four analysts’ estimates.
“LG’s strategy seems to be to make anything they can come up
with, with the hope that something will become a hit,” said Woo Chang Hee, a
Seoul-based analyst at LIG Investment & Securities Co. “They may be taking
the right steps, but the pace isn’t fast enough.”
Until that happens, student Gwon says he will stay away.
“I want to see more people around me using LG phones first
before I buy,” he said.