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LG’s Lost Advantage

August 12, 2010 Leave a comment

2008 was a brilliant year for LG’s handset division. Their strategy of providing feature phones with smartphone enhancements took the market by storm; they essentially created a third tier of mobile devices. It seemed to many in the industry that this could be the company that would ultimately “do a Motorola” and release a RAZR type marquee product that they would be able to milk for years to come. We jump to 2010 and LG’s surge has been surpassed by HTC and Samsung. LG are now seen as the budget alternative, far behind the competition rather than the smart choice.

There are many reasons that could explain how the company failed to maximise the opportunity it had created for itself in 2008, but there is only one description that accurately encompasses them all – complacency. What I find particularly perplexing is why they believed the company was in a position to contemplate such actions. Unlike Motorola, they did not have a RAZR product to milk. They did have the Viewty, but this was in no way a device successful enough to carry the business. It could be that their analysis of the market was incorrect and they did not see the trend for full smartphones coming, despite being on-board with Android from the beginning and being a player with the Windows Mobile. There is also the outside chance that LG are content with being in the second tier of handset manufacturers, but I believe the most distinguished theory lies in the belief that other principalities of the LG empire took more of a priority.

While the handset business did wonders for enhancing the profile of the company in 2007 – 2008, it was their display technology division and sales of their plasma and LCD televisions that gave the board their bonuses. The rate of growth in this market at the time was quite impressive, with LG benefiting as other manufacturing looked to the Korean maker for display panels. All growth comes at a cost however, and money had to be spent on growing their manufacturing facilities to increase capacity. In March 2009 LG opened a new $1.6billion LCD plant in South Korea, with further investments totally almost $3billion in other manufacturing facilities by 2018.

It is perhaps selfish of me to observe their actions from with limited knowledge and a clear bias towards their mobile offerings. I am sure people more acquainted with the company as a whole will have seen this as the right long-term move for the company, but I do that they do not neglect the mobile market for too long. Their unique way of thinking and imaginative offerings continue to push other manufacturers and this is something we must never tire of, even if there are disappointments along the way.