South Korea’s LG Electronics Inc. will be exiting the smartphone business this year because of intensified competition in the Market. Smartphone companies like Apple, Samsung, and Huawei squeezed out the brand. LG said in a statement on Monday that it will be focusing on other divisions such as connected devices, electric vehicle parts, robotics, and smart home offerings but will keep leveraging its expertise to develop technologies such as 6G to help strengthen its competitiveness in other business areas.
LG Electronics Inc, which was the first major smartphone brand, is exiting the market due to a number of other reasons. While the brand sold more than 1.3 billion phones last year, it saw a 12.5% decline due to economic disruptions of the pandemic and consumers holding their phones longer. Additionally, LG’s flagship models had software and hardware mishaps and slower software updates which made the brand slip.
The South Korean brand’s sales are relatively low compared to other leading smartphone brands. To put it in perspective, Apple and Samsung’s global market shares are 19% and 15% respectively, while LG’s global market share is about 2%.
What was once considered the third-largest smartphone manufacturer, is now suffering. The smartphone division is now the smallest division in the company, which accounts for only 7% of the company's revenue. All of the mentioned reasons have forced LG to focus on more successful operations such as home entertainment and robotics.
The company said that it will be exiting the market by the end of July, but consumers can still find LG phones for some time after that. The company added that it will be providing service support and software updates for customers of existing products for a period of time.
References:
1) Lee, J., & Yang, H. (2021, April 05). South Korea's Lg becomes first major smartphone brand to withdraw from market. Retrieved April 06, 2021, from https://www.reuters.com/article/idUSKBN2BS032
2) Shaban, H. (2021, April 05). LG is getting out of the smartphone business it helped pioneer. Retrieved April 06, 2021, from https://www.washingtonpost.com/business/2021/04/05/lg-quitting-smartphone/
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