LG quits the 'incredibly competitive' smartphone business

Posted:
in General Discussion
LG is to close its entire mobile business unit by July 31, and concentrate instead on components, connected devices, and smart homes.

The LG V50, a dual-screen 5G smartphone
The LG V50, a dual-screen 5G smartphone


As expected following a $4.4 billion loss in 2020, LG has announced that it is to abandon the smartphone market. Other than what it describes as "inventory of some existing models," all LG smartphones will cease to be sold after July 31.

"LG Electronics Inc. (LG) announced that it is closing its mobile business unit," said the company in a statement. "The decision was approved by its board of directors earlier today."

"LG's strategic decision to exit the incredibly competitive mobile phone sector," it continued, "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."

Rumors of the closure had been increasing since the company reportedly failed to find a buyer for the business division. It has not been clear how such a closure might affect LG's providing of smartphone technologies to Apple, and the official announcement only indirectly addresses this.

"Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G to help further strengthen competitiveness in other business areas," it says. "Core technologies developed during the two decades of LG's mobile business operations will also be retained and applied to existing and future products."

LG has previously been one of the suppliers producing screens for the iPhone. Most recently, it was reported that LG was to manufacture displays for a future foldable iPhone.

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Comments

  • Reply 1 of 11
    Samsung won the high-end Android war. LG can’t beat Samsung there, and they can’t compete against Xiaomi and Huawei in the budget space. Trying to compete at this point is simply too costly and doesn’t produce any advantage.

    Pulling out was the right decision.
    jeffharriswatto_cobra
  • Reply 2 of 11
    GeorgeBMacGeorgeBMac Posts: 9,047member
    The smart phone market has matured and is entering the same kind of space PCs entered a decade or so ago:   commodities.
    Like automobiles some have more features than others.   But, from a hardware perspective, user's needs are being met and exceeded -- so low prices and the accompanying low margins are becoming more common

    That is why Apple's approach of putting as much effort and resources into its ecosystem as its hardware will be paying dividends for the next decade or so.  

    That is:  it's not the hardware that sets iPhone apart from the rest of the pack, its the software and ecosystem that does that for them.   No other vendor can compete with them in that respect.   If iPhones are compared to high end Samsung models (or even Chinese brands) strictly on their hardware it becomes a coin flip that changes every 6 months as new models are released.  But, the reason Apple's iPhones have such a loyal following is because their software and ecosystems set them apart and above the rest.
    edited April 5 flyingdpwatto_cobra
  • Reply 3 of 11
    cloudguycloudguy Posts: 323member
    @The_New_tonton and @GeorgeBMac:

    Enough of the self-serving narratives from people who don't buy or use Android phones. Here is the truth: LG was a bizarre combination of arrogant and cowardly.

    They were cowardly because - similar to Sony - they refused to advertise. It is amazing: both Sony and LG were willing to spend tons advertising their legacy products like video, audio, appliances etc. But the next ad that I see for a Sony or LG smartphone or tablet will be the first. Well I take that back: LG aired a series of weird ads a few years ago that didn't even show their phones.

    As for the arrogant part: they were unwilling to go the route of HMD Global (Nokia), Motorola, ZTE and the rest by focusing on compelling midrange and cheap devices. It is simple: offer a basically unmodified version of Android, ditch your custom apps and services (which are costly to make and maintain but only lose money) and better yet get Microsoft, Amazon or someone else to pay you to put their apps and skin (an Android skin is a custom UX/UI to replace the generic one that Google ships that everybody hates) on your device. You can then either put the latest Qualcomm CPU in a device with last year's tech - like OnePlus once did - or put either last year's Qualcomm CPU or the latest MediaTek CPU in a device with this year's tech. You wind up with a very good device that costs half what a Samsung Galaxy S or iPhone costs. 

    That - and offering "gaming phones" that actually exceed Samsung flagship specs and performance that are made primarily for the Asian market - are what the other Android companies are doing now. LG refused because "they're a big global brand." Yeah, but what is the point of being "a big global brand" if you aren't going to advertise? If you are going to be like the other bargain brands and not advertise then you need to adopt the bargain strategy that they do. You especially don't try to be a premium brand with flagship devices while shipping your own buggy customized version of Android that makes the hardware perform worse and for which you never push updates. Good grief.

    All LG needed to do was cut the side deal with Microsoft that Samsung has now. Of course Samsung retains their own One UI skin - formerly TouchWiz - because people actually like it. (Much of it has been incorporated in Google stock Android.) But Microsoft is paying Samsung hundreds of millions a year to put their apps and services on their devices and they promote/sell Samsung's phones in the Microsoft store right along side their own hardware. (Microsoft fans are ... ambivalent about this.) LG should have beaten Samsung to the punch. They could have given Microsoft the responsibility of designing the skin (Microsoft already has a launcher - a skin as an app - and turning it into a formal skin merely means adding the app code to the default Google code) and providing regular OS and security updates. They could have been the ones to promote Office 365, OneDrive, xCloud etc. and even launched a global advertising campaign with Microsoft declaring their phones and tablets as "work/play devices." 

    But they were too proud on one hand and too risk averse on the other to pursue it. While Samsung was taking risks by working on foldable phones - and even put up with getting laughed at when their first gen foldable phone device had to be recalled - LG just added a snapon case that functions as a second screen that didn't even have UI support. (Again, cut a deal with Microsoft and the same excellent second screen support that Microsoft implemented for the Duo could have been on LG phones years ago.) 

    Sony is the same. They spend tons of money promoting a PlayStation device that they have admitted loses them money for each they sell. And they only sell about 25 million PlayStations in a good year. They could sell 50-100 million midrange Android phones and tablets a year for what a PlayStation costs and actually make money on them. They could actually take any number of the Android PS2 and PS3 emulators that people already download from the Play Store, fix the bugs and give them cloud features and use them to sell old PlayStation games through their own storefront! Why they didn't do this? Funny story actually ... because Sony didn't want their phones and tablets to compete with their Playstation handhelds. But the handhelds didn't sell anyway - because people were buying iPhones, iPads and Galaxy devices to game on - and Sony wound up pulling them. (Facepalm.)

    LG and Sony. So much potential but were killed off by a combination of arrogance, risk aversion and parochialism. The funny thing: LG and Sony were both considered superior brands before the smartphone boom. Samsung was considered a bulk supplier of appliances and generic electronics and not a player in computing or high tech at all. Maybe it was precisely because they were considered second class that they were willing to take the risks and do the things that LG and Sony considered beneath them. Ah well, who needs those hundreds of billions in profits anyway? The worst part is that thanks to the halo of their smartphone business, Samsung's electronics and appliances are now far better regarded also. Just a complete and total disaster. Sony had just better hope that Apple doesn't make a serious move into video gaming. Because if they do, Samsung will copy it and the competition from Apple, Microsoft and Samsung won't leave anything left for PlayStation.
    MichaelKohlgatorguy
  • Reply 4 of 11
    dewmedewme Posts: 3,450member
    Having worked closely with engineers who came from the cellphone business I’ve come to understand that not everyone is cut out for the fast pace, narrow windows of opportunity, and stress of that business. I’d say the same thing about gaming software. Not everyone and not every company is cut out for certain businesses. 

    I’d rather see people and organizations recognize what they are good at and enjoy doing instead of struggling at something they hate simply to chase after money. 

    The biggest concern I have about Apple is them getting into a “Chasing Money” mode with products like an Apple Car. I saw GE get into Chasing Money mode under Jack Welch and become a mega conglomerate with marching orders to be #1 or #2 in every business they went after, from plastics to financial services. Of course the #1/#2 thing was based on bottom line financial results and market share, not necessarily being The Best provider. Long story short, a lot of those businesses in GE’s portfolio got sloughed off over the years and GE as a whole was close to being delisted not very long ago. 

    So I’d add a +1 to Cloudguy’s arrogance point. However I’d also give LG humility points for finally recognizing that they don’t have what it takes to survive the constant death march pace of the cellphone business. In truth they probably hated it as much as I know I’d hate writing gaming software. If your heart’s not in it, don’t waste your time or our time spinning your wheels, and beware the money chase, no matter how easy pickings it may appear, and despite how deep your wallet may seem at the time.  
    edited April 5 watto_cobra
  • Reply 5 of 11
    nicholfdnicholfd Posts: 416member
    cloudguy said:
    @The_New_tonton and @GeorgeBMac:

    Enough of the self-serving narratives from people who don't buy or use Android phones. Here is the truth: LG was a bizarre combination of arrogant and cowardly.
    .
    .
    .


    You do realize that when you blather on so long, people just skip the post, right?

    Just I did above, in the quote.  First sentence, see all the paragraphs & move on.
    Japheyjony0StrangeDaysGeorgeBMacDogpersonRayz2016uraharawatto_cobra
  • Reply 6 of 11
    JinTechJinTech Posts: 729member
    The smart phone market has matured and is entering the same kind of space PCs entered a decade or so ago:   commodities.
    Like automobiles some have more features than others.   But, from a hardware perspective, user's needs are being met and exceeded -- so low prices and the accompanying low margins are becoming more common

    That is why Apple's approach of putting as much effort and resources into its ecosystem as its hardware will be paying dividends for the next decade or so.  

    That is:  it's not the hardware that sets iPhone apart from the rest of the pack, its the software and ecosystem that does that for them.   No other vendor can compete with them in that respect.   If iPhones are compared to high end Samsung models (or even Chinese brands) strictly on their hardware it becomes a coin flip that changes every 6 months as new models are released.  But, the reason Apple's iPhones have such a loyal following is because their software and ecosystems set them apart and above the rest.
    Except for it kind of is the hardware. The A series chips are leaps and bounds better than anything on the Android platform has had and likely will ever have.
    watto_cobra
  • Reply 7 of 11
    cloudguy said:
    @The_New_tonton and @GeorgeBMac:

    Enough of the self-serving narratives from people who don't buy or use Android phones. Here is the truth: LG was a bizarre combination of arrogant and cowardly.

    They were cowardly because - similar to Sony - they refused to advertise. It is amazing: both Sony and LG were willing to spend tons advertising their legacy products like video, audio, appliances etc. But the next ad that I see for a Sony or LG smartphone or tablet will be the first. Well I take that back: LG aired a series of weird ads a few years ago that didn't even show their phones.

    As for the arrogant part: they were unwilling to go the route of HMD Global (Nokia), Motorola, ZTE and the rest by focusing on compelling midrange and cheap devices. It is simple: offer a basically unmodified version of Android, ditch your custom apps and services (which are costly to make and maintain but only lose money) and better yet get Microsoft, Amazon or someone else to pay you to put their apps and skin (an Android skin is a custom UX/UI to replace the generic one that Google ships that everybody hates) on your device. You can then either put the latest Qualcomm CPU in a device with last year's tech - like OnePlus once did - or put either last year's Qualcomm CPU or the latest MediaTek CPU in a device with this year's tech. You wind up with a very good device that costs half what a Samsung Galaxy S or iPhone costs. 

    That - and offering "gaming phones" that actually exceed Samsung flagship specs and performance that are made primarily for the Asian market - are what the other Android companies are doing now. LG refused because "they're a big global brand." Yeah, but what is the point of being "a big global brand" if you aren't going to advertise? If you are going to be like the other bargain brands and not advertise then you need to adopt the bargain strategy that they do. You especially don't try to be a premium brand with flagship devices while shipping your own buggy customized version of Android that makes the hardware perform worse and for which you never push updates. Good grief.

    All LG needed to do was cut the side deal with Microsoft that Samsung has now. Of course Samsung retains their own One UI skin - formerly TouchWiz - because people actually like it. (Much of it has been incorporated in Google stock Android.) But Microsoft is paying Samsung hundreds of millions a year to put their apps and services on their devices and they promote/sell Samsung's phones in the Microsoft store right along side their own hardware. (Microsoft fans are ... ambivalent about this.) LG should have beaten Samsung to the punch. They could have given Microsoft the responsibility of designing the skin (Microsoft already has a launcher - a skin as an app - and turning it into a formal skin merely means adding the app code to the default Google code) and providing regular OS and security updates. They could have been the ones to promote Office 365, OneDrive, xCloud etc. and even launched a global advertising campaign with Microsoft declaring their phones and tablets as "work/play devices." 

    But they were too proud on one hand and too risk averse on the other to pursue it. While Samsung was taking risks by working on foldable phones - and even put up with getting laughed at when their first gen foldable phone device had to be recalled - LG just added a snapon case that functions as a second screen that didn't even have UI support. (Again, cut a deal with Microsoft and the same excellent second screen support that Microsoft implemented for the Duo could have been on LG phones years ago.) 

    Sony is the same. They spend tons of money promoting a PlayStation device that they have admitted loses them money for each they sell. And they only sell about 25 million PlayStations in a good year. They could sell 50-100 million midrange Android phones and tablets a year for what a PlayStation costs and actually make money on them. They could actually take any number of the Android PS2 and PS3 emulators that people already download from the Play Store, fix the bugs and give them cloud features and use them to sell old PlayStation games through their own storefront! Why they didn't do this? Funny story actually ... because Sony didn't want their phones and tablets to compete with their Playstation handhelds. But the handhelds didn't sell anyway - because people were buying iPhones, iPads and Galaxy devices to game on - and Sony wound up pulling them. (Facepalm.)

    LG and Sony. So much potential but were killed off by a combination of arrogance, risk aversion and parochialism. The funny thing: LG and Sony were both considered superior brands before the smartphone boom. Samsung was considered a bulk supplier of appliances and generic electronics and not a player in computing or high tech at all. Maybe it was precisely because they were considered second class that they were willing to take the risks and do the things that LG and Sony considered beneath them. Ah well, who needs those hundreds of billions in profits anyway? The worst part is that thanks to the halo of their smartphone business, Samsung's electronics and appliances are now far better regarded also. Just a complete and total disaster. Sony had just better hope that Apple doesn't make a serious move into video gaming. Because if they do, Samsung will copy it and the competition from Apple, Microsoft and Samsung won't leave anything left for PlayStation.

    The PlayStation console itself is not profitable, but it is at the center of an ecosystem that is very profitable for Sony. The gaming and network services division is Sony's most profitable division. They're not making money off of the PlayStation itself, but the services that rely on it (PS Store, PS Plus, PS Now, first party games) are very profitable. 

    edited April 5 muthuk_vanalingamfastasleepwatto_cobra
  • Reply 8 of 11
    igorskyigorsky Posts: 496member
    nicholfd said:
    cloudguy said:
    @The_New_tonton and @GeorgeBMac:

    Enough of the self-serving narratives from people who don't buy or use Android phones. Here is the truth: LG was a bizarre combination of arrogant and cowardly.
    .
    .
    .


    You do realize that when you blather on so long, people just skip the post, right?

    Just I did above, in the quote.  First sentence, see all the paragraphs & move on.
    I stopped after "Here is the truth".
    StrangeDayswatto_cobra
  • Reply 9 of 11
    GeorgeBMacGeorgeBMac Posts: 9,047member
    MICHAELTM said:
    cloudguy said:
    @The_New_tonton and @GeorgeBMac:

    Enough of the self-serving narratives from people who don't buy or use Android phones. Here is the truth: LG was a bizarre combination of arrogant and cowardly.

    They were cowardly because - similar to Sony - they refused to advertise. It is amazing: both Sony and LG were willing to spend tons advertising their legacy products like video, audio, appliances etc. But the next ad that I see for a Sony or LG smartphone or tablet will be the first. Well I take that back: LG aired a series of weird ads a few years ago that didn't even show their phones.

    As for the arrogant part: they were unwilling to go the route of HMD Global (Nokia), Motorola, ZTE and the rest by focusing on compelling midrange and cheap devices. It is simple: offer a basically unmodified version of Android, ditch your custom apps and services (which are costly to make and maintain but only lose money) and better yet get Microsoft, Amazon or someone else to pay you to put their apps and skin (an Android skin is a custom UX/UI to replace the generic one that Google ships that everybody hates) on your device. You can then either put the latest Qualcomm CPU in a device with last year's tech - like OnePlus once did - or put either last year's Qualcomm CPU or the latest MediaTek CPU in a device with this year's tech. You wind up with a very good device that costs half what a Samsung Galaxy S or iPhone costs. 

    That - and offering "gaming phones" that actually exceed Samsung flagship specs and performance that are made primarily for the Asian market - are what the other Android companies are doing now. LG refused because "they're a big global brand." Yeah, but what is the point of being "a big global brand" if you aren't going to advertise? If you are going to be like the other bargain brands and not advertise then you need to adopt the bargain strategy that they do. You especially don't try to be a premium brand with flagship devices while shipping your own buggy customized version of Android that makes the hardware perform worse and for which you never push updates. Good grief.

    All LG needed to do was cut the side deal with Microsoft that Samsung has now. Of course Samsung retains their own One UI skin - formerly TouchWiz - because people actually like it. (Much of it has been incorporated in Google stock Android.) But Microsoft is paying Samsung hundreds of millions a year to put their apps and services on their devices and they promote/sell Samsung's phones in the Microsoft store right along side their own hardware. (Microsoft fans are ... ambivalent about this.) LG should have beaten Samsung to the punch. They could have given Microsoft the responsibility of designing the skin (Microsoft already has a launcher - a skin as an app - and turning it into a formal skin merely means adding the app code to the default Google code) and providing regular OS and security updates. They could have been the ones to promote Office 365, OneDrive, xCloud etc. and even launched a global advertising campaign with Microsoft declaring their phones and tablets as "work/play devices." 

    But they were too proud on one hand and too risk averse on the other to pursue it. While Samsung was taking risks by working on foldable phones - and even put up with getting laughed at when their first gen foldable phone device had to be recalled - LG just added a snapon case that functions as a second screen that didn't even have UI support. (Again, cut a deal with Microsoft and the same excellent second screen support that Microsoft implemented for the Duo could have been on LG phones years ago.) 

    Sony is the same. They spend tons of money promoting a PlayStation device that they have admitted loses them money for each they sell. And they only sell about 25 million PlayStations in a good year. They could sell 50-100 million midrange Android phones and tablets a year for what a PlayStation costs and actually make money on them. They could actually take any number of the Android PS2 and PS3 emulators that people already download from the Play Store, fix the bugs and give them cloud features and use them to sell old PlayStation games through their own storefront! Why they didn't do this? Funny story actually ... because Sony didn't want their phones and tablets to compete with their Playstation handhelds. But the handhelds didn't sell anyway - because people were buying iPhones, iPads and Galaxy devices to game on - and Sony wound up pulling them. (Facepalm.)

    LG and Sony. So much potential but were killed off by a combination of arrogance, risk aversion and parochialism. The funny thing: LG and Sony were both considered superior brands before the smartphone boom. Samsung was considered a bulk supplier of appliances and generic electronics and not a player in computing or high tech at all. Maybe it was precisely because they were considered second class that they were willing to take the risks and do the things that LG and Sony considered beneath them. Ah well, who needs those hundreds of billions in profits anyway? The worst part is that thanks to the halo of their smartphone business, Samsung's electronics and appliances are now far better regarded also. Just a complete and total disaster. Sony had just better hope that Apple doesn't make a serious move into video gaming. Because if they do, Samsung will copy it and the competition from Apple, Microsoft and Samsung won't leave anything left for PlayStation.

    The PlayStation console itself is not profitable, but it is at the center of an ecosystem that is very profitable for Sony. The gaming and network services division is Sony's most profitable division. They're not making money off of the PlayStation itself, but the services that rely on it (PS Store, PS Plus, PS Now, first party games) are very profitable. 


    Gillette used to be a classic marketing model taught in business schools:   They pretty much gave away their razors -- but then you had to buy their blades.   I suspect HP is doing much the same with their printers.   And, as you point out, Sony may be using the same kind of model.

    That's what smart businesses do.   Find the edge.
    watto_cobra
  • Reply 10 of 11
    cloudguy said:


    Excellent and informative analysis CloudGuy!!! 
  • Reply 11 of 11
    Rayz2016Rayz2016 Posts: 6,679member
    nicholfd said:
    cloudguy said:
    @The_New_tonton and @GeorgeBMac:

    Enough of the self-serving narratives from people who don't buy or use Android phones. Here is the truth: LG was a bizarre combination of arrogant and cowardly.
    .
    .
    .


    You do realize that when you blather on so long, people just skip the post, right?

    Just I did above, in the quote.  First sentence, see all the paragraphs & move on.
    I got to “Here is the truth”, thought “Sez you, anonymous forum dweller” and scooted past. 


    edited April 6 GeorgeBMacwatto_cobra
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