LG Electronics CEO resigns after smartphone struggles
After struggling to compete with the iPhone and other high-end smartphones, LG Electronics chief executive Nam Yong resigned Friday.
Yong is the latest in a series of mobile executives that have resigned or been ousted after lackluster sales in the smartphone market. In the course of a week, Nokia's CEO, Chairman, and smartphone chief all announced their resignations.
Bon-joon Koo, "a member of the founding family of the broader LG conglomerate," will replace Yong as CEO, according to a report by the Wall Street Journal. Koo is currently CEO of LG International and was previously an executive at LG Display.
Smartphones are being blamed for the recent corporate turnover and shaky quarters. "Numerous makers, including Nokia and LG have attributed declines in profit margins to pressure by other smartphone makers such as Apple Inc. and Research in Motion," the report noted.
Although Nokia and LG are ranked number one and number three in global handset shipments respectively, they have, for the most part, been shipping budget low-margin handsets, rather than pricier offerings that can compete with the iPhone or BlackBerry.
In August, Research firm Gartner called LG's strategy "risky." After analyzing second quarter data, Gartner noted that LG's average selling price fell 27.7 percent even as handset sales fell year-over-year.
Recent data from comScore revealed that LG managed to hold on to its second-place ranking of mobile OEMs in the U.S., but the Korea-based company was missing from the list of "Top Smartphone Platforms."
LG launched its first global smartphone this week: the Android-based Optimus One, but the news is too little, too late for Yong.
The company is also trying to make up for lost time in tablet market, where the iPad has taken an early lead. Last month, LG vice president Chang Ma proclaimed the company's upcoming Optimus tablet as "better than the iPad."
Yong is the latest in a series of mobile executives that have resigned or been ousted after lackluster sales in the smartphone market. In the course of a week, Nokia's CEO, Chairman, and smartphone chief all announced their resignations.
Bon-joon Koo, "a member of the founding family of the broader LG conglomerate," will replace Yong as CEO, according to a report by the Wall Street Journal. Koo is currently CEO of LG International and was previously an executive at LG Display.
Smartphones are being blamed for the recent corporate turnover and shaky quarters. "Numerous makers, including Nokia and LG have attributed declines in profit margins to pressure by other smartphone makers such as Apple Inc. and Research in Motion," the report noted.
Although Nokia and LG are ranked number one and number three in global handset shipments respectively, they have, for the most part, been shipping budget low-margin handsets, rather than pricier offerings that can compete with the iPhone or BlackBerry.
In August, Research firm Gartner called LG's strategy "risky." After analyzing second quarter data, Gartner noted that LG's average selling price fell 27.7 percent even as handset sales fell year-over-year.
Recent data from comScore revealed that LG managed to hold on to its second-place ranking of mobile OEMs in the U.S., but the Korea-based company was missing from the list of "Top Smartphone Platforms."
LG launched its first global smartphone this week: the Android-based Optimus One, but the news is too little, too late for Yong.
The company is also trying to make up for lost time in tablet market, where the iPad has taken an early lead. Last month, LG vice president Chang Ma proclaimed the company's upcoming Optimus tablet as "better than the iPad."
Comments
Last month, LG vice president Chang Ma proclaimed the company's upcoming Optimus tablet as "better than the iPad."
.... so just two or three months before Apple launches iPad v2, this guy will launch a tablet that will compete with iPad v1.
Oh my. They are still playing catch up with yesterday...
.... so just two or three months before Apple launches iPad v2, this guy will launch a tablet that will compete with iPad v1.
Oh my. They are still playing catch up with yesterday...
I get that the iPad is the pinnacle device and there is no iPad 2 specs in which to compare, but internally these companies don’t seem to be trying to get in front of Apple… and that makes a sad panda.
I get that the iPad is the pinnacle device and there is no iPad 2 specs in which to compare, but internally these companies don’t seem to be looking ahead to ry to get in front of Apple… and that makes a sad panda.
They could figure out what Apple iPad v2 will look like but they don't want to strain their brains figuring it out. I also think that they don't even have to think to figure it out. All they have to do is follow Apple centric websites and they will get everything in a silver plate
I get that the iPad is the pinnacle device and there is no iPad 2 specs in which to compare, but internally these companies don?t seem to be trying to get in front of Apple? and that makes a sad panda.
The embedded world isn't the desktop/laptop world where you can slap together crap and call it a solution.
Cheap embedded devices are just that, cheap.
People are finally drawing the line where they want style and quality together again.
.... so just two or three months before Apple launches iPad v2, this guy will launch a tablet that will compete with iPad v1.
Oh my. They are still playing catch up with yesterday...
Unfortunately they don't even understand why the iPad is selling. It's really tough to compete in a market where you can't comprehend the appeal of the devices.
Features such as battery life and usability trump raw processing power and multiple peripheral connections. Above all else, easy to use software.
Until these companies get focused on those things instead of "our processors have .21Ghz faster clock speeds", their products will fail.
I have a bit of faith that LG can bring great hardware devices to market. The one thing they have to do, though, is get into software to be truly exceptional stand-out products. That's where most of the competition falls short.
They could figure out what Apple iPad v2 will look like but they don't want to strain their brains figuring it out. I also think that they don't even have to think to figure it out. All they have to do is follow Apple centric websites and they will get everything in a silver plate
There is nothing wrong with playing follow the leader, but I would definitely like more fiscal competition to drive faster innovations. Apple definitely took a gamble with the iPad, and a lot of other things over the years. I?d love to know how Mac OS X evolved into today?s iOS.
Looks like Life's (not so) Good for Mr Yong.,,
I hope LG, Nokia and others can figure out how to be successful in this market. Motorola and HTC seem to have figured it out so I?m hopeful.
LG are very successful in other electronic product markets, I wonder why this one is seen as worth his resignation?
They could figure out what Apple iPad v2 will look like but they don't want to strain their brains figuring it out. I also think that they don't even have to think to figure it out. All they have to do is follow Apple centric websites and they will get everything in a silver plate
Well.. Jason Chen will get his hands on the iPad 2 prototype somehow.. And show it to the competitors and the rest of humanity. He's probably bar hopping right now looking for drunk Apple engineers.
LG are very successful in other electronic product markets, I wonder why this one is seen as worth his resignation?
Looking quickly at their last quarter results verifies your comment about their success in other areas. They were only down in the phone areas and all but one other segment showed solid profit gains YoY.
I did notice that they used more cash and accumulated more debt. Maybe he was trying things that were scaring the board. For all we know he had a vision that was as golden as Jobs but he wasn?t able to hold on long enough to let it come to fruition. I have to wonder what the Apple board thought about the move to iPods. You watch the original video of Steve announcing the iPod and audience is pretty much ?WTF?!, in my opinion.
Samsung makes up around 20% of the Korean economy, which is quite significant and a lot of Koreans don?t like one company having that kind of power and influence. LG probably makes up another 10% and Hyundai 15%. Heck, the CEO of the Samsung Group (the largest industrial conglomerate in the world) and the son of its founder, Lee Kun-Hee, was convicted of tax evasion but the government let him off the hook (presidential pardon) because of what Samsung means to the Korean economy. That?s the type of company Samsung is and the same goes for LG.
Samsung (along with the other family-controlled ?chaebol? conglomerates in Korea like LG, Hyundai, Daewoo, Sunkyung, etc.) got in the position of where they are through their cozy relationship with the military dictatorship government of President Park Jeong-Hee in the 60′s and 70′s. The government essentially subsidized these companies so they can export cheap stuff all over the world. These companies didn?t earn anything on their own. They essentially bribed their way into the position they?re in now.
Also, the products of these Korean conglomerates like the Hyundai cars and Samsung/LG phones, TV?s, washing machines, etc. cost more in Korea than they do in the export markets like the US. Through their collusion with the Korean government, they overcharge the Korean consumers while imposing very high tariffs on imported goods from the US, Japan and Europe so they can make their profits in the domestic market and sell cheap overseas so they can gain market share and expand manufacturing capacity.
When the iPhone was introduced to the Korean market last year, Samsung and LG went into a panic mode and set off a marketing campaign with a nationalist xenophobic theme telling the Korean consumers that they need to be ?patriotic? and buy Korean-made products. Well, the Korean consumers aren?t falling for that line and have been snatching up iPhones faster than Apple could provide them. It?s ridiculous what these Korean conglomerates resort to. You think Microsoft, Apple and Google are bad? These Korean conglomerates make them look like saints.
After struggling to compete with the iPhone and other high-end smartphones, LG Electronics chief executive Nam Yong resigned Friday.
Damn.
These hardware execs are dropping like flies.
About Korean Conglomerates - Samsung, LG, Hyundai, etc.
... You think Microsoft, Apple and Google are bad? These Korean conglomerates make them look like saints.
Thanks for the insights, Alex! (Though I hardly believe that many people on a site called AppleInsider would consider that Apple is in any way 'bad'.)
Enz
Looking quickly at their last quarter results verifies your comment about their success in other areas. They were only down in the phone areas and all but one other segment showed solid profit gains YoY.
I did notice that they used more cash and accumulated more debt. Maybe he was trying things that were scaring the board. For all we know he had a vision that was as golden as Jobs but he wasn?t able to hold on long enough to let it come to fruition. I have to wonder what the Apple board thought about the move to iPods. You watch the original video of Steve announcing the iPod and audience is pretty much ?WTF?!, in my opinion.
If so I wonder ... was it an original golden vision as SJ's are or simply another 'let's copy' Apple's vision (as are all the other tech companies at the moment).
Yes, Apple's board had some balls to let SJ go off on what at the time must have been a massive tangent . Apple to enter the portable music business, who would have thunk? Sony ruled that and everyone knew that back then.
Perhaps as he was on his second coming he got some slack LOL.
About Korean Conglomerates - Samsung, LG, Hyundai, etc.
I wonder if any American companies bribe their way into prominence? My mind wanders to defense contracts for some reason ....
Thanks for the insights, Alex! (Though I hardly believe that many people on a site called AppleInsider would consider that Apple is in any way 'bad'.)
Enz
I'm a Korean-American who grew up in Korea and still visit there often, so I guess I can offer some worthwhile insight about the Korean conglomerates that so thoroughly dominate the Korean economy and even culture in general. Hate to say it, but I think it's utter BS and find it totally stifling to see the Samsung, LG and Hyundai logos virtually everywhere you go over there. You can't drive around for a few minutes without their logos blaring in your face. I can also say that I've never bought a single product from one of those big 3 conglomerates in my life.
As far as my comment lumping in Apple with Microsoft and Google, I'm sure you know that the Apple haters out there refer to Apple as being an evil control freak. When I try to look at things from their points of view, it's understandable. Apple plays hardball but that's the nature of this ruthless cutthroat tech industry: it's kill or be killed and Apple's got some mighty competition out there.
I wonder if any American companies bribe their way into prominence? My mind wanders to defense contracts for some reason ....
I'm sure this kind of stuff happens all the time in many countries, but not in such a brazen overt manner that the Korean conglomerates built themselves over the past 4 decades or so.
I have to give credit where credit is due. Samsung and LG have both overtaken Sony and Panasonic as the leading consumer electronics firms and that was unthinkable only 10 years ago. For the longest time, Samsung and LG mainly focused on overtaking the Japanese electronics giants and they've succeeded. Samsung Electronics did $119 billion in '09 and they're still growing fast. LG Electronics ($72 billion) is within spitting distance of overtaking Sony and Panasonic in revenues (both at around $80 billion).
Samsung is definitely very wary of Apple because they see what happened to Sony with the iPod and Nokia with the iPhone. Apple clearly has Samsung on its sights – including the TV business in the future. They both want to rule the connected home/living room and will be competing vigorously in that area. The same goes for LG but Samsung is certainly the more powerful company.
The thing about Samsung and LG is that they have no coherent strategy when it comes to the mobile platform. They just follow what’s going on and then throw whatever they can at the wall and see what sticks. Samsung is really wasting its time trying to build a platform/ecosystem with their Bada. You know that they’ll offer the WP7 phones and tablets as well. Ditto for LG. Samsung would love to control their own platform and not rely on the Android or WP7 for their phones and ecosystem, but that’s just *not* going to happen.
The thing that works against Samsung and LG is that they’re too spread out doing too many things besides phones, PC’s and TV’s. They also do refrigerators, washing machines and dryers, rice cookers, microwave ovens and just about anything else that plugs into an electrical outlet. I’m not even going to get into the businesses of their other affiliates under the Samsung and LG brands that cover everything from shipbuilding to insurance and sunglasses to toothpastes. But in the meantime, their most profitable businesses are the semiconductors (58% of Samsung’s profits) and the flat panel displays that they sell to Apple and other PC companies.
The chip and display divisions at both Samsung and LG do not really care where the orders come from. They have a mandate to keep the factories running at maximum capacity. They’ll happily take orders from Apple (as well as HP, Dell, etc.) as they do from their own phone and TV divisions. It’s up to Samsung and LG’s mobile products divisions to create the demand for their products if they don’t want to sell the components to Apple. Right now and for the foreseeable future, they need Apple’s business to keep the factories humming and the profits coming because they’re certainly not making as much money with the phones.
I’m sure Apple is very well aware of their supply chain situation. For one, they’ll continue to pit Samsung and LG against each other as they are archenemies and Apple will continue to develop new sources in China that want a piece (or big chunks) of Samsung and LG’s chip and display businesses. The fact that Apple will also compete with Samsung and LG makes the stakes that much higher for Apple. Apple has some time but you know Apple does not want to rely on their chief competitors for these critical components.
I believe Apple is working feverishly in China to develop alternate sources and it’s also why Apple’s been acquiring chip design companies and may very well be looking into their own manufacturing. Samsung and LG are aware of this too. They need to fill the chip and display factories with orders for their own phones and tablets before Apple (along with Dell, HP and other PC makers that they'll also be competing against) pulls out completely by going to alternate sources. That may take years, but they both know that it’s inevitable and they’re all racing against time right now. Does Apple pull out first when Samsung/LG still need Apple’s orders or do they win the race and lock out Apple when Apple still needs the components?