- Tram Ho
After years of losses and losses to Chinese rivals, LG announced a plan to turn around for mobile in late 2018. Having made an impression through creative models such as G2 or Nexus 4, by 2018 the mobile division has become a “black streak” at LG. In that year, the entire Korean group recorded a profit of US $ 2.4 billion. This figure would have been 3.1 billion, if the mobile segment did not “burn” the parent company to 700 million because of losses.
A year later, LG’s “turning heads” plan has made an unexpected … impression. The loss of the mobile segment increased from US $ 700 million to US $ 858 million in 2019. At the same time, according to a new Counterpoint report, the number of LG smartphones shipped last year has continued to decline by more than 10 million. Its market share is now only 2% and will likely be surpassed by Realme, a 3-year-old rival in 2020.
Until now, LG is still struggling to shape a clear product strategy.
LG offers a lot of reasons to explain the new loss. “The popular smartphone segment sold slowly in foreign markets”. “Marketing costs to support top-of-the-line products have also increased.” The only thing LG doesn’t dare to say is that the company is failing comprehensively in the mobile war.
What is the measure to end this situation? The Korean company said it would “continue to launch mid-to-high-end 5G smartphones and continue its low-cost efforts”. But all competitors already have 5G smartphones, LG will not be able to use this new connection as a separate advantage. And, LG has always had mid-range, high-end and cheap smartphones. The statement of the Korean giant is no different than acknowledging, LG (still) wants to escape losses, but does not know what to do with its product portfolio.
In the middle of last year, LG began a campaign to gradually shift production from South Korea to Vietnam to cut costs. However, this is only a temporary measure as LG’s smartphone models are still not popular, still completely overshadowed by iPhone, Galaxy and Chinese smartphones. At least LG still has more than $ 5 billion in profits from other areas to support smartphones. But looking at the current situation, no one knows how long the Korean company will continue to struggle.
Source : Genk