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LG may say bye-bye to making and selling phones

LG has had a tough time keeping up with rivals in the smartphone industry and it may finally have decided to give up.

twitter-logoShubham Verma | January 20, 2021 | Updated 16:41 IST
Source: Reuters

Highlights

  • LG is said to be considering leaving the smartphone business.
  • Last year, it was also reportedly planning to sell low-end business.
  • LG has been making losses in the smartphone business for about six years.

Ask yourself if you will buy an LG smartphone today. Some of you will say yes, some would be surprised to know LG still makes phones, but the majority would say no. And because of these naysayers, LG is finally quitting the smartphone business. LG Electronics CEO Kwon Bong-seok has said that it was "about time for LG to make a cold judgement" referring to the winding up of the phone business that has been in shambles for over six years. The company boss might now be looking at "sale, withdrawal and [a] downsizing" of LG smartphone business after having tough luck in the smartphone industry.

According to The Korea Herald, Bong-seok has shared a message to his staff that a decision on the company's smartphone business is impending. The LG CEO took the role of managing the company's smartphone business, among others, in early 2020. He was confident that LG would be "profitable by 2021" but he did not explain how that was going to happen. Although for Bong-seok, launching new phones with "wow factors" was a part of the plan to turn around the business that is making a huge loss in the past six years. The new smartphones would include the wild LG Wing that has two displays, the Velvet, and the recently unveiled LG Rollable, which was a concept phone at CES 2021 until the company decided to launch it later this year.

All the new smartphones that LG has been launching over the past year belong to the premium segment, which is unlike Apple, not ludicrous enough for the company to drive revenue. The archnemesis Samsung has been hurling all sorts of smartphones to the market under its Galaxy M and Galaxy A series, which sell more than the flagship Galaxy S and Galaxy Note series. Including Samsung, other smartphone industry players based out of China -- Oppo, OnePlus, Vivo, Xiaomi, and Realme -- harmed LG's smartphone business. So much so that it shrank to just 1.7 per cent on the global charts, according to StatCounter's report released in December last year.

Last month, LG was also reported to have decided that it will sell its low- and mid-end phones to third party vendors who will manufacture the device and sell them, although the LG branding will be intact. The company said that it will only focus on the premium segment with the Project Explorer underway for smartphones such as Wing. LG did not divulge much back then, but its decision to call it quits in the smartphone industry is not surprising at all.

Bong-seok, in his letter, has said that 60 per cent of employees in the phone business will be moved to other departments in the company. But the future of the remaining 40 per cent is not certain as of now. There is a fat chance that LG will retain the workforce to use their institutional knowledge for future products, even if they are not smartphones. Japan's Sony still has the smartphone division running after the massive downsizing to use their intel for developing various technologies that are used in phones for future gadgets that may launch.

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