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LG Electronics said on the 20th that it is reviewing all possibilities, including the abolition of the MC business division in charge of the smartphone business, the sale, retirement and integration of business units take-over, due to the judgment of the group management that it is difficult to bear it anymore. It becomes an answer. In fact, it’s more realistic to say that LG Electronics’ MC division, which is in charge of LG phones, has come and gone without a mast for the past few years. (☞related article)
LG Electronics’ smartphone business has been in the red for 23 consecutive quarters since the second quarter of 2015. Cumulative losses over the past five years amounted to 5 trillion won. This is a staggering amount for LG Electronics, with annual sales of 63 billion won and operating profit of 2 to 3 billion won.
So LG Electronics initiated a strategy to address the deficit by reducing the amplitude of the deficit through organizational reorganization and relocation of production bases 3 to 4 years ago, and what has reached that critical point is the background of the existence of this smartphone business. The slow smartphone business has a huge impact on other departments. There are also stories that the continuing redistribution of the workforce and the march toward deficit is having a negative impact on interdepartmental cooperation and communication.
In fact, the challenges and ups and downs of LG smartphones started from its history.
While the Galaxy series brand in Samsung Electronics ‘instant messaging segment, which LG Electronics’ MC division saw as a competitor, has steadily grown and expanded as a single smartphone brand, LG Electronics introduced the Optimus series In 2012, It has tried to transform various brands such as the Vu series.
Finally, last year, the G series was scrapped and the ‘Velvet’ brand, which used the product’s mascot name as a trademark, was introduced just like in the days of feature phones. However, the market assessment was disappointing. Rather, it is assessed that such frequent brand changes have been more poisonous than beneficial to LG Electronics’ smartphones. The flagship flagship brand is changing too fast. It is comparable to the missing cell star Hwatong-Freeway-Cyon (CION, CYON).
Also, it is noted that energy was consumed for too long in the cartwheel game. Since 2015, LG Electronics has been striving to normalize the smartphone business as the company’s number one goal since Joon-ho Cho, president of MC’s business division. LG tried to reproduce this with its own method of success and dreamed of resurrecting it by turning the fight into competition with Samsung and Apple with an original model. The world’s first G5 modular smartphone, announced by MWC in March 2016, is representative. At the time of the announcement, it received tremendous attention, but it did not meet the consumer use value and was rejected from the market.
It was from this point on that LG Electronics came under fire for focusing too much on the ‘Gimmick’ element rather than increasing the intrinsic value of the smartphone itself that users want. Of course, there were several attempts to overcome the crisis, but the harsh market assessment that it was an irrational number out of the essence followed as a label. The market gradually declined and market share in the North American market, which is an orchard, also began to decline. LG Electronics’ MC division, which once surpassed Nokia and ranked fourth in the world market and third as a brand, finally fell to ninth in the world market in 2019, and was defeated by the big three Chinese Huawei, Xiaomi. and OPPO. He had the humiliation of being in the Others.
According to the news familiar with LG, it is the standard that LG Electronics has decided this year as the latest maginot line of the smartphone business. Experts say it’s great if it succeeds, but it’s well understood by seeing that pilot products, which may end up as experimental work, are being rolled onto the launch line and taking the last step. In the market, the ‘roll-up phone’, which has been launched recently, is expected to be a crossroads.
So regardless of whether the roll-up phone is launched or not, the time is drawing near as to whether LG Electronics will stop its smartphone business, sell it elsewhere, or keep its name by consolidating the business unit (HE). while expanding the ODM. .
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Currently, aftermarket manufacturers like LG Electronics, LG Display and LG Innotek, do not have a high proportion of sales to LG phones, so it is a general theory that there will not be a chain crash if LG Electronics goes out of business. Furthermore, the fact that the internal R&D capabilities of MC’s business division have already significantly diminished suggests the possibility of suppression or sale of the business. However, it is not easy to give up business, as smartphones are the key devices of the future that play a critical role as controller in the Internet of Things (IoT) age.
An industry insider said: “There is a sense of being late for LG Electronics to achieve ‘Wow Factor’ success in the smartphone business.” We can achieve results, ”he said.
