LG promises mobile profits by end 2021

LG’s new CEO has promised to recover the lost fortunes of yesteryear, driving the mobile business unit towards profitability within two years.

After a pre-Christmas game of management musical chairs, LG’s new CEO Brian Kwon is quickly setting to work. Some might set themselves an easy task for a new job and new year, but Kwon is diving into the deep-end to tackle the former money-making machine and current problem child of the LG family; the mobile communications business unit.

“LG Electronics mobile business is going to be profitable by 2021,” said Kwon. “I can say we can make that happen as LG Electronics will expand our mobile line-up and steadily release new ones attached with some wow factors to woo consumers.”

In an industry which is desperately starving for and disastrously struggling to provide innovation, what Kwon envisions to woo customers remains to be seen. Details were very thin on the ground, but the mobile division certainly needs a jolt from somewhere.

Year-on-year, the mobile communications business has not been performing. For the third quarter of 2019, sales declined 24% compared to 2018, where as the unit declined 21% in the second period and 29% in the first. 2019 was a pretty disastrous year for the mobile business, though fortunes have been slipping away for years.

At the beginning of the last decade, LG was very much a different kind of player in the mobile market. In fact, it is quite remarkable the way the market has shifted over the course of ten years.

2019 Q3 smartphone shipment estimates from Counterpoint research

Although the likes of Samsung and Apple would have been at the top of the leaderboard at the beginning of the last decade, everyone else has gone through a considerable shake-up. Several of the leading manufacturers today did not exist 10 years ago, while some brands have not aged well. HTC, Nokia, Microsoft and Blackberry are all extinct, while LG and Motorola are two shadows of their former heavyweight stature.

The world has been captivated by the newly-emerging Chinese brands, with Huawei leading the charge. These companies have been regularly stealing market share, and profits, from some of the older smartphone brands and it will take some big moves to counter these trends. LG still controls a useful 10% market share in the US, though this is shrinking year-on-year and is perhaps down to the anti-China sentiment in the country as opposed to anything else.

Although the LG picture is not the prettiest, there are some useful ideas coming out of the division. What is also worth bearing in mind is this is a consumer electronics giant which produces some excellent products. The mobile business unit is suffering, not necessarily LG on the whole.

Looking at the products on offer, one of the more interesting in recent months. The LG G8X ThinQ is a dual screen product, addressing multi-tasking and increased screen real estate trends, but thanks to the modular design, consumers do not have to carry around bulky devices or worry about breaking folding screens. It is a very useful product, albeit niche.

Turning around this performance will certainly be a challenge for Kwon and the newly appointed management team. Not only will internal issues have to be sorted, external momentum and brand popularity will have to be considered. LG is no-longer considered to be a top-end mobile brand, as rivals have stolen the thunder.