LG announces desperate move in latest attempt to save its smartphone business
Stop us if you've heard this one before. According to a new Reuters report, LG is looking to "reorganize" its long-struggling mobile phone division in yet another attempt to enhance its profitability (or rather find the right angle to actually turn a profit for a change).
What's different about this latest strategic change compared to the umpteen similar announcements in the past is that LG plans to put its money where its mouth is for once. Or rather keep some of the money it used to throw out the window on largely unsuccessful and completely unprofitable "low to mid-end smartphones."
While budget-friendly LG-branded handsets will continue to be a thing, the Korea-based company doesn't intend to actually produce those anymore. Instead, an unnamed ODM (original design manufacturer) will be hired to take care of that task at a presumably lower cost, allowing LG to either reduce its prices or beef up those (nonexistent) profits. Possibly, a bit of both.
The goal is to better compete against the likes of Huawei, Xiaomi, Oppo, and Vivo, which have been eating away at the sales numbers of OEMs (original equipment manufacturers) like LG, HTC, or Sony for several years now with cheaper and oftentimes superior products.
Speaking of, LG also seems focused on avoiding Sony and especially HTC's fate by paying more attention to premium devices like the unconventional Wing and gorgeous Velvet. The research, development, design, and manufacturing of these types of upper mid-range and high-end products will remain an entirely in-house affair, at least for the foreseeable future, which might help LG avoid repeats of the many strategic mistakes that ultimately buried both the G and V series.
Strictly speaking from a low to mid-end market perspective, however, analysts are not particularly optimistic about LG's chances of finding success anytime soon, pointing to the far superior marketing skills (and deep pockets) of the aforementioned Chinese handset vendors as a key differentiator.
LG was ranked ninth overall in global smartphone shipments during Q3 2020 by Counterpoint Research, mind you, being surpassed by everyone from Samsung to Huawei, Xiaomi, Oppo, Vivo, and Realme while posting a mobile department financial loss for the 22nd (!!!) consecutive quarter.
Clearly, desperate times call for desperate measures, but it remains to be seen if this specific move will prove inspired enough to right LG's slowly sinking ship.
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