LG Exits Smartphone Market: What You Need to Know

LG's Exit from the Smartphone Market: A Retrospective

Within the technology sector, LG will be remembered as a significant innovator in smartphone development. For over fifteen years, the company held a prominent position within the Android ecosystem and was instrumental in introducing numerous advancements that are now commonplace.

The Pioneering LG Prada

A particularly noteworthy achievement was the launch of the LG Prada. Unveiled a month prior to the original iPhone, this device played a key role in establishing the touchscreen interface that now characterizes the vast majority of smartphones. The company even publicly asserted that Apple had imitated its design, stating, “We believe Apple copied the Prada phone design following its presentation at the iF Design Award, where it received recognition in September 2006.”

LG consistently pursued innovation, though not always with resounding success. Ultimately, however, the company found itself unable to maintain a competitive edge. This week, the South Korean electronics corporation announced its withdrawal from the “highly competitive” smartphone market, opting to concentrate on its diverse range of other business divisions.

Seeking a Buyer and Inventory Clearance

This decision follows months of speculation regarding the company’s attempts to sell its smartphone division. Ultimately, no suitable buyer emerged. LG will cease smartphone sales this July, liquidating its remaining stock.

A Crowded and Competitive Landscape

The smartphone market is undeniably competitive. LG’s market share consistently placed it within the “Others” category, overshadowed by industry leaders such as Samsung, Apple, Huawei, and Xiaomi. Other manufacturers, predominantly from China like Vivo, also occupy this segment.

With dominant players in the premium sector and companies offering affordable devices, there appeared to be limited room for LG to thrive. The brand gradually lost prominence, despite ongoing efforts to explore unconventional designs, such as the Wing with its secondary, swiveling screen.

Parallels with HTC

LG’s recent trajectory draws parallels to HTC, another company that has struggled in the smartphone arena. HTC has also faced rumors of downsizing and, in 2018, sold a substantial portion of its smartphone division to Google for $1.1 billion. This acquisition contributed to the development of subsequent Pixel devices, while HTC continued operations.

The Possibility of a Revival?

It’s important to remember that brands can sometimes experience revivals. BlackBerry and Nokia have both returned through intellectual property licensing, and even the Palm brand has been resurrected. However, these brands benefit from strong nostalgic appeal, something LG may lack. While some consumers hold positive memories of LG devices, widespread brand loyalty, particularly outside of Korea, is questionable.

COVID-19 and Market Contraction

While the COVID-19 pandemic may have hastened LG’s departure, the underlying issues were present for years. Samsung had already established dominance in the high-end market, Huawei presented a strong alternative, and numerous Chinese manufacturers controlled the lower price tiers.

The overall smartphone market was already contracting before the pandemic. Widespread unemployment and lockdowns further exacerbated the decline, hindering the anticipated growth spurred by 5G technology. The first half of 2020 saw a 20% decrease in sales, with the subsequent recovery largely benefiting Apple’s release of its first 5G handset.

A Strategic Shift to 6G

The time was right for LG to exit the smartphone sector. The delay in doing so was likely due to the difficulty in finding a willing buyer, especially considering Google’s lukewarm experience with the $1.1 billion HTC acquisition.

LG is now focusing on future technologies, including 6G. While the market is showing signs of recovery after the pandemic-induced downturn, enthusiasm remains tempered, particularly for a former pioneer that spent years as a mid-tier competitor.