After failing to reach an agreement on the sale of the mobile phone business with vingroup in Vietnam, Volkswagen in Germany and other bidders, LG Electronics finally decided to terminate the business on July 31, 2021.

After 26 years, LG mobile phone has ushered in today’s grand finale, which is regrettable. In this article, let’s see how LG moves from the peak to exit. After LG exits, what opportunities will Samsung, Xiaomi and other brands usher in?

At its peak, it ranked among the top three in the world

In 1995, South Korean technology giant LG Electronics entered the mobile phone market.

At that time, smart phones had not appeared, and the mobile phone market still won by design. LG Electronics swept the whole mobile phone market with its unique design, among which “chocolate”, “ice cream” and other mobile phones were the most popular.

In 2008, the sales volume of LG mobile phones exceeded 100 million; In 2009, it became the third largest mobile phone manufacturer.

In 2010, LG entered the smartphone market late, so it faced many obstacles. After the subversion, LG began to decline.

Although it made a breakthrough with G Series in 2013, its market share once again entered the top three in the world and became the third largest mobile phone manufacturer in the world, second only to Samsung and apple.

But LG’s smartphone is six years later than Apple’s iPhone and three years later than Samsung’s Galaxy s. In addition, with the strong rise of Chinese mobile phone brands, LG has been losing ground since 2015.

With a large number of IP, LG may turn on the authorization mode

Comparative study of LG’s mobile phone and smartphone business

According to relevant data, LG has gradually disappeared in the Chinese market since 2016.

Since LG failed to launch the modular smartphone G5 in 2017, the shipment volume began to decline sharply. LG’s 2017 annual financial report shows that the loss of LG mobile department where LG mobile phone is located is very serious. LG sold 13.9 million mobile phones in 2017, a further decrease of about 1% compared with the total in 2016. The loss of its mobile Department reached $190 million in the fourth quarter, and then increased year by year.

In 2018, LG mobile officially announced its withdrawal from the Chinese market and cancelled the high-end series.

V50thinkq in 2019 and wing in 2020 also failed, resulting in a drop in shipments to 24.4 million units.

According to counter point data, in the third quarter of 2020, LG shipped 6.5 million mobile phones, lower than 7.2 million in the same period in 2019, accounting for only 2% of the global mobile phone market, while Samsung shipped nearly 80 million in the same period, 12 times that of LG.

In January this year, LG disclosed the video of the first scroll screen concept mobile phone and planned to go public within this year, but later the project has been shelved.

From the second quarter of 2015 to the fourth quarter of 2020, there have been losses for 23 consecutive quarters, and the cumulative loss has reached 29.1 billion yuan.

In the fierce market competition, LG mobile phones are gradually eliminated.

After a huge loss, he failed to sell himself and finally decided to quit the smartphone business.

Impact of LG’s decision on the market

Over the years, LG has shifted its focus to North America, Latin America and South Korea. Most of these markets are operator driven.

Cooperation with operators has always been LG’s biggest advantage, rather than marketing and selling mobile phones in an open market with multi-layer distribution.

LG lacks the vision, strength and scale of multi-layer distribution route, while Samsung has achieved great success in this regard.

According to the counter point analysis, LG’s sales in North America and Latin America account for more than 80% of its total sales, so LG is heavily dependent on its main target regions. However, in this regard, the company’s market share is also declining.

With a large number of IP, LG may turn on the authorization mode

North American smartphone shipments by brand, Q4 2020

In a market like the United States, LG is the third largest brand with a 9% market share, while Samsung doubled its launch of affordable A-Series products to capture LG’s prepaid market share. Motorola, HMD, Alcatel, ZTE and vinsmart grabbed the rest.

In Latin America, Motorola and Xiaomi will fill this gap.

In South Korea, the entry of some Chinese suppliers such as Samsung and Xiaomi can meet the diversified demands of operators.

Since Xiaomi plans to re-enter the Korean market in 2021 and contact the global market with its new mi11 pro and mi11 ultra flagship models and active marketing strategy, we have high hopes for Xiaomi!

With a large number of IP, LG may turn on the authorization mode

LG’s shipments by price range in the fourth quarter of 2020

With a large number of IP, LG may turn on the authorization mode

In the fourth quarter of 2020, the share of LG models in the price range above $500 decreased by 5% P, while the share of models in the lower price range increased by 2% p.

Unlike LG, which is famous for its high-end flagship models in the Korean market, its sales in the global market are limited to low-cost models.

Through vertical integration, sister companies and multiple departments have helped LG innovate and established strong R & D and intellectual property rights. Because LG owns a large number of intellectual property rights, LG may start licensing intellectual property rights in the next step,

LG announced that “advanced mobile technologies (such as 6G, camera and software) will become the key competitiveness in the development of TV, home appliances, automotive electronics and robots”. The company also said it would focus on ensuring the security of 6G technology, which is expected to be standardized in 2025 and commercialized in 2029.

We believe LG will develop more innovations in components and lifestyle products.

After 26 years of operation, LG chose to withdraw from this industry. We hope to see LG take this opportunity to invest in the next wave of technology in the future.

        Editor in charge: PJ

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