LG’s appliance division posts a profit not so much its mobile division

The earlier pillars of the Android market such as Sony, HTC, LG have given way to Chinese brands such as Huawei, Oppo and Vivo.

Although LG is happy that it has made a sizeable profit this quarter, its joy is however dimmed by the fact that its mobile division has suffered yet another weak quarter due to the lackluster sale of the LG G5.

Its problems are however not just linked to just its flagship smartphone, they run much deeper as the company has yet to make a profit since the second quarter of 2015. Furthermore, even then it was making just 1.2 cents on every handset it sold.

However, it is too early to write off its mobile division. In 2013, when LG’s profits walked off a cliff, the company just managed to stay afloat and be in the black. There is a big difference in what has happened now with what happened then.

Not only is the current drop deeper and longer, but the entire scenario of the smartphone market has undergone a radical change: IDC’s latest published results for the smartphone market only goes to show that the boom in the smartphone market has come to its logical end.

All those who can afford to purchase a smartphone already own one. Those who don’t own one are not bothered on acquiring one for at least the next 2 years.

Consumers are tending to hold on to their devices for a much longer period of time.

Samsung has been forced to innovate to sail through the rough waves and as per its latest quarterly results, its shipment volumes have increased. It however could be the exception.

The handset business has not been flooded by Chinese companies: once hallowed brands such as Sony, HTC, LG are no longer make the cut to the “top five handset makers” lists. They have now been replaced by Chinese brands such as Oppo, Huawei, and Vivo. Oppo & Vivo have BBK Electronics as their parent company.

These 3 Chinese brands have managed to ship 22.6, 32.1, and 16.4 million handsets, respectively in the last three months. LG, despite its considerable brand recognition managed to ship just 13.9 million in the same period.

These brands are now trying to even eclipse Apple’s shipments, which have dropped by 15% since the same quarter in 2015.

Although KG has said it is now working on a V series, the question remains as to whether the V10 from which this new series is inspired on, can make the cut and recapture LG’s lost glory.

Although it’s unlikely that LG will crash out from the smartphone business, the question however, is how long will it manage to stay afloat given its performance.

Although, one can argue that BlackBerry and Nokia have stayed on for years, history has however that once you are in a death spiral, it’s difficult to come out.

What is however pretty sure is that, with the rapid changes in the smartphone industry, only those companies which quickly learn to adapt to the new world economy will survive.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s