LG is exiting the smartphone business, so who's next?
The Koreans are probably doing the right thing but there may be more such departures before the year is out
Putting an end to rumors that were flying around for more than a year - repeatedly shot down officially only to return a few weeks later - LG Electronics confirmed that it is exiting the smartphone business. The Korean giant's mobile division will cease operations by the end of July. LG's statement reiterates that the company plans to focus on "connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services". The company stated that it will continue to support current owners of its headsets with operating system and security updates, although there was no specific timeframe mentioned.
Truth be told, this is not an unexpected development given the fact that LG's mobile division has seen huge losses over the past five years. Despite the fact that the Koreans tried their hand in more innovative form factors than any other smartphone manufacturer, they failed to capture the hearts and minds of consumers in the high-end segment as well as the low-end. Squeezed between the Samsung/Apple's duopoly and the rising power of the Chinese manufacturers - Huawei, Xiaomi, Oppo etc. - LG was afforded little room for error and very little breathing space between years of negative results.
It is sad, really, since LG really did bring a number of quality smartphones to the global market and offered quite a few unusual designs that tried to push past the commonplace look of "glass and metal slabs". Samsung's relentless marketing and Apple's loyal fanbase, though, limited the chances of LG's top models to a minimum while Chinese manufacturers never actually gave LG's more affordable models a chance.
With LG terminating its smartphone business, what comes into sharp focus once more is the cutthroat nature of this particular market: players are many, margins are thin, brand is still a deciding factor and the way mobile operating systems work means that a different, innovative design is actually more of a risk than a potential advantage. So how is a company not already into the Top 5 of smartphone makers supposed to make a splash, set itself apart from the competition and attract high enough sales?
That's anyone guess - the fact of the matter is, though, that LG is not the only manufacturer whose smartphone business operated at a loss for years. Sony, for instance, has been on the same boat for as long as anyone can remember, despite the fact that the Japanese have also been releasing some amazing handsets as of late. Not leaving the smartphone business because of ecosystem aspirations is a strategic choice on Sony's part, but then again so was LG's.
HTC is also putting out a few handsets still, although it barely cracks the Top 20 of smartphone sales globally. Same goes for Lenovo, which treats smartphones as complementary devices to computers essentially (Moto models are a different story). Panasonic's smartphone output is so limited as to make commercial sense for Japan only. There are some others, even smaller, players but the point is this: the smartphone market feels overcrowded, so more decisions like the one LG made would not be out of the question. Will 2021 see another high-profile exit in the mobile space, especially given current circumstances? We'll just have to wait and see.