LG to Close Mobile Phone Business
The US’ steady number-three phone maker gave way to financial losses and announced it’s quitting the business.
By Sascha Segan
LG announced that it will close its mobile phone business, which is still the number-three player by sales in the US. The company will sell down its existing inventory of phones such as the LG Stylo 6, LG Wing and LG Velvet, while continuing to provide support and software updates “for a period of time which will vary by region.”
“LG’s strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services,” the company said in a press release.
The company had reportedly sought a buyer for its long money-losing phone business, but it hadn’t found any takers.
Among other things, this means LG’s rollable phone will probably never see the light of day. But as LG is a display maker and provider to other phone manufacturers, the same technology may pop up elsewhere.
LG as a company is not doomed. According to its fourth-quarter earnings release, LG Electronics makes a considerable profit in its home appliance/air conditioning and home entertainment businesses, which include its renowned OLED TVs. The LG conglomerate has other businesses that play a large role in the battery and display markets.
Many Americans know LG for its major role in the mobile phone business, going back to Sprint’s Touchpoint 1100 phone in 2000. During the flip-phone years, LG had a string of massive hits on Sprint and Verizon, making many of the best-selling flips of the 2004–2009 era, such as the VX6000 and VX8100. LG originally came to the fore in the US because, like Samsung, it decided to make a big bet on Qualcomm’s CDMA technology. That made it a major supplier for Verizon and Sprint and their predecessors, including Alltel and Western Wireless.
CDMA created a sort of walled garden in the US and parts of Asia where different manufacturers flourished compared with the rest of the world. LG, Samsung, Sanyo, and Motorola were stronger here than they were globally; Nokia and Ericsson didn’t want to play much in CDMA and thus weren’t as big a deal in the US as in the rest of the world. The Chinese phone-makers that dominate sales figures today weren’t on the charts at all.
The US Was Never Enough
According to Counterpoint Research, LG is and has consistently been the third-largest mobile phone maker in the US. In a market dominated by Apple and Samsung, LG has held a 9% to 13% market share over the past few quarters, Counterpoint says. That’s down from 18% in early 2017, but it’s still significant.
In an M Science report that we covered in February, the LG Wing didn’t have a strong showing, but the LG V60 ThinQ 5G showed up as the most popular 5G phone in the US, selling more than 240,000 units. LG’s position is even stronger with the prepaid carriers at the lower end of our market. According to a Wave7 Research report, LG held market share above 20% at Metro by T-Mobile in early March, buoyed by strong sales of the LG Stylo 6.
But LG faded globally, especially over the past five years, as new, affordable Chinese vendors rose. Counterpoint says the company had a 4% to 5% global market share in 2015—better than OPPO, Vivo, or Xiaomi—but it dropped to 2% by the end of 2020, as LG’s Chinese rivals outpaced it with global market shares around 10% each. That resistance to the new, buzzy Chinese vendors may be part of what helped keep LG relatively stable in the US market, even as its role crumbled in countries where those other companies sell phones.
Will OnePlus, Motorola Pick Up The Slack?
LG’s primary role at US carriers was as a reliable partner for affordable phones. The flagship G series were outsold here by the cheaper K series and Stylo phones, for instance. Especially at Verizon, LG was known for having reliable, easy-to-certify phones. In our Reader’s Choice awards this year, though, LG’s phones had very low scores for tech support and repairs and had the lowest “likelihood to recommend” of the major brands.
The elimination of Sprint killed one of LG’s primary partners, too, with the newly merged T-Mobile looking like it’s turning to OnePlus as a partner to balance out Samsung and Apple. OnePlus now provides phones all the way up T-Mobile’s lineup, from the low-cost Nord N100 to the flagship OnePlus 9 Pro. At Verizon, Motorola and TCL play strong roles on the affordable sides of the lineup.
With the end of the business, PCMag no longer recommends LG phones. It’s a pity; I liked their wit, their creativity, and their people.
Originally published at https://www.pcmag.com.
