LG has finally called it quits in the smartphone business. The company confirmed the news earlier today. The shutdown could arguably have been a long time coming due to the continuous losses experienced in its smartphone arm.
In an official statement, the company said its “strategic decision to exit the incredibly competitive mobile phone sector would 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.”
The company said the wind-down is expected to be complete by July 31.
LG’s phone inventory will continue to be available for sale. Plus, the company is also committing to provide service support and software updates for an unspecified period, which will vary by region.
The company will work with its suppliers and business partners hand in hand throughout the mobile phone business’s closure, it said in a statement. However, it didn’t provide much information on the future of employees working on its phones. The only information is that this “will be determined at the local level.”
An earlier report suggested that the company was considering all options on the future of its loss-making phone business, including a sale. But a March report suggested cancellation of sell-off negotiations with Germany’s Volkswagen AG and Vietnam’s Vingroup JSC, leaving the company with one option – winding down.
Recent Failed Strategies
As one of the smartphone industry pioneering firms, new Chinese smartphone companies gave the company a run for its money. It tried several strategies to revive its business, but all has been in vain.
In early 2020, LG overhauled its smartphones with new Velvet branding “to establish a clearer brand identity,” and to “reflect current trends of addressing the unique personal tastes and emotions of the individual with a greater emphasis on design,” said Chang Ma, senior vice president of product strategy of LG’s mobile business.
In December, LG decided to start outsourcing low-cost smartphones to save its sinking smartphone ship. But as of the end of the year, the company’s loss from its phone arm stood at $ 750.63 million(about Ksh 81.48 trillion).
LG’s smartphone unit has made losses for 23 consecutive quarters since Q2, 2015.
But while its smartphone arm has been falling, other business units are making a dent in respective industries, helping the company’s profit increase over the years. LG was the third-best-selling smartphone company in North America last year, according to analytics firm Counterpoint Research. So if there’s any new market up for grabs, it’s the North American region and in its home country South Korea.
In the majority of the remaining markets, LG’s exit will not lead to any massive changes.
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