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LG will leave the cell phone business despite being a pioneer

(CNN Business) — LG is exiting the “incredibly competitive” business of making cell phones. On Monday, the South Korean tech giant announced that it was shutting down its mobile phone unit after years of losses, marking the end of an era for a pioneer in the Android world.

The division is expected to be liquidated by July 31. However, the company may continue to sell some of its existing models after that, according to LG Electronics.

The “strategic decision to exit the incredibly competitive mobile phone industry will allow the company to focus resources on growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions,” said the company in a statement.

LG was once one of the world’s leading smartphone manufacturers. It even made the top three in 2013, according to research firm Strategy Analytics.

But the popularity of the company’s devices has since waned. This is in particular because Chinese-made phones like Xiaomi and Oppo have been on the rise around the world. As of last year, LG was no longer even among the top seven global players in cell phones, according to Counterpoint Research. However, it remains the third most popular smartphone provider in the United States, after Apple and Samsung, according to market research firm Canalys.

“LG leaves a ‘small gap’ in global market share of less than 2%,” Neil Shah, partner and vice president of research at Counterpoint Research, told CNN Business.

Samsung is likely to fill that space in both South Korea and the United States, as well as some smaller players, he predicted.

These are Samsung’s low-cost smartphones 1:22

LG abandons the cell phone race

LG had already warned about the fate of its phone business in January, saying it was considering all options, including a possible sale of the unit.

The decision to quit on Monday was met with a torrent of nostalgia on social media. Users shared photos of their first LG phones and recalled the company’s willingness to innovate.

«It works one for LG Mobile. They are the reason we have [cámaras ultraanchas] on all new phones right now, ”wrote Marques Brownlee, technology critic and video producer, on Twitter. (LG’s V40 phone has been widely recognized with the introduction of the feature in smartphones.)

“They weren’t always good on all phones, but losing them means losing a competitor who was willing to try new things, even when they weren’t working,” added Brownlee.

Austin Evans, a technology video blogger, noted that “LG was never perfect, but in a world of boring blocks, they delivered some of the most unique phone designs, ideas and features ever.”

LG was known to go the extra mile with its smartphones. In 2013, it launched a curved smartphone screen. That made it one of the first electronics manufacturers at the time to introduce the technology to the mass market.

Two years later, the company wowed experts with the high-end photo-taking capabilities of its LG G4. Former CNN Business technology editor David Goldman said it “might just be the best smartphone camera on the planet.”

And last year, LG introduced the WING 5G, a 5G-enabled smartphone that came with two displays. One of the screens could rotate up to 90 degrees, with the aim of allowing users to switch between different applications at the same time and multitask more easily.

The last big stir for the company came just three months ago, when it revealed a phone that could be turned into a tablet.

LG will not launch its latest cell phone

LG said at the time that the device would launch sometime this year. But the company confirmed to CNN Business on Monday that it will not launch now.

“During years, [el] LG smartphone was known for its innovative and unconventional features, ”Shengtao Jin, a research analyst at Canalys, told CNN Business. “While these features helped LG differentiate itself from other major brands, most consumers did not find much practical value in these features.”

But the company will not abandon the industry entirely. “In the future, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G,” it said in the statement.

“The core technologies developed during LG’s two decades of mobile business operations will also be preserved and applied to existing and future products.”

Experts believe that this decision can help the company in the future. LG will enjoy better growth prospects overall once it shuts down the mobile business, said Shah, who described the move as “removing the thorn” from the company’s “feet”.

“It would be more prudent for LG to cut losses and bet on areas where it has an advantage, such as the display business,” added Jin.

Shares of LG Electronics closed down 2.5% in South Korea on Monday after the news.

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