Why LG decided to stop making cell phones (and what can you do if you have one)

LG
One of LG’s biggest innovations was the incorporation of the wide angle to its cameras / Photo GETTY IMAGES

LG became the third largest cell phone manufacturer in the world in distant 2013 and yet in recent years its smartphone division has struggled amid fierce competition in a market that includes Apple, Motorola or Huawei.

The obstacles have been such that this Monday the company announced the definitive closure of its cell phone business around the world.

As early as January, the South Korean electronics giant said it was considering all options for the division, after posting nearly six years of losses totaling roughly $ 4.5 billion.

The goodbye will affect all the regions in which it has a presence. Also to Latin America, its third largest market in terms of sales.

Until June 2020, LG held a 4.5% market share there, although far from the 42.5% held by the leader, Samsung.

“LG’s 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, as well as platforms and services, ”the company said in a statement.

LG was one of the longest-lived smartphone manufacturers in the industry / Photo GETTY IMAGES

But aside from the losses, the consultancy Counterpoint attributes this closure to the fact that “when the era of smartphones began, LG adopted Microsoft’s operating system instead of Android and made a relatively late entry to Google’s operating system.”

That, according to experts, is a factor that would have made their cell phones lose their appeal.

“Despite the launch of some innovative devices, LG failed to captivate consumers, which also caused a change in strategy,” says the consultancy.

To all this we must add that LG decided to fight in the high and mid-range segment of smartphones, one of which has more rivals and that the company itself described as “incredibly competitive”.

But what will happen to those who have an LG model?

The LG G6, launched in 2017, incorporated two cameras and a fingerprint recognition on the back / Photo GETTY IMAGES

Normal

The first thing to keep in mind is that the closure will not mean that any cell phone will stop working overnight and on that side, its owners can rest easy.

The brand confirmed that in the coming months it will offer support to those who have a cell phone from the South Korean firm famous for its televisions and other appliances.

“We will provide service support and software updates for customers of existing products for a period of time that will vary by region,” he said in reference to the laws on warranties valid in each country.

And while the liquidation of the mobile phone business is expected to be completed on July 31, inventory for some existing models may still be available after that date.

LG has partnered with automotive supplier Magna International to manufacture parts for electric cars / Photo MAGNA

The smartphone business is the smallest of LG’s five divisions and accounts for just 7.4% of its revenue.

Currently, its global mobile phone market share is around 2%.

LG still has a strong consumer electronics business, particularly with appliances and televisions.

In fact, it is the second best-selling TV brand in the world after Samsung.

In December it launched a joint venture with automotive supplier Magna International to make key components for electric cars.

LG will focus its technological development effort on other divisions / Photo GETTY IMAGES

“Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies, such as 6G, to help further strengthen competitiveness in other business areas,” added a spokesperson.

Analysts said South Korean rival Samsung and Chinese companies such as Oppo, Vivo and Xiaomi would likely benefit the most from LG’s exit from the market.

Smartphone makers struggled during the covid-19 pandemic.

Sales were down 10% in 2020, mainly due to closures that limited store openings.

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