LG to pull the plug on its smartphone business

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The company said it’s exiting the “incredibly competitive” mobile phone market to focus on other areas, such as electric vehicle components, connected devices, smart homes and robotics.

Image: CNET

LG is closing the door on its smartphone business.

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Top 5G smartphones of 2020

(TechRepublic)

In the midst of heavy competition from Apple and Samsung as well as Chinese vendors Xiaomi and Huawei, Korea-based LG said in a statement that the decision to shut down its mobile business unit was approved by its board of directors early Monday.

The company added that the move will allow it to focus on other growth areas, including electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions.

LG said that the closing of its mobile phone business should be completed by July 31, though certain existing products may still be available after that date. The company said it will continue to provide support and software updates for owners of existing mobile products, but the timeframe on this will vary by region. In the interim, LG will work with suppliers and business partners as it moves toward the closing date.

Despite the decision, LG will still play some role in the future of mobile. The company said it plans to use its expertise to develop certain mobile-related technologies such as 6G. It also aims to retain some of the core mobile technologies developed over the past 20 years and apply them to existing and future products.

As LG said, the mobile industry has become incredibly competitive. Phone makers such as LG, Motorola and Sony have traditionally been squeezed by Apple and Samsung, which have dominated the global market. But the past few years have seen a greater demand for phones from Chinese players such as Xiaomi, Huawei and OPPO, not just in their home country but in other regions around the world.

Along the way, LG has taken a hit. At its peak, the company had around a 10% slice of the global smartphone market, according to Gartner senior principal analyst Tuong Nguyen. As of the fourth quarter of 2020, that share had fallen to around 2%. Such a decline reflects the intense competition in the smartphone arena, both for new players and established vendors.

“Competing against well-known brands such as Apple increasingly means that a smartphone vendor needs a comprehensive value proposition,” Nguyen told TechRepublic. “In other words, it wasn’t just about selling a standalone device. It was the ecosystem of associated applications and services and generating consumer loyalty in the process. On the other hand, many of the lesser known brands focused more on the device itself, often at a much more affordable price.”

Though LG plans to continue to play in the mobile technology arena, the company may find challenges ahead without a smartphone lineup to anchor itself in the lives of consumers, Nguyen said. As such, positioning itself as a leading consumer electronics brand will be difficult. However, this could also be an opportunity for LG to approach the consumer electronics market with a new strategy that could turn it into an even stronger brand.

Beyond the intense competition, LG is also likely leaving the smartphone business to avoid more investments in future hardware, according to Chris Hazelton, director of security solutions at Lookout.

“LG has been competing in a market where it’s difficult to differentiate on hardware, and it will only get harder,” Hazelton said. “The next revolution of hardware that comes with folding screens will require significant investment with little chance of success for most vendors. It’s likely that LG wants to avoid investing hundreds of millions of dollars in the development of its own folding screens for smartphones.”

LG has promised to support existing smartphone customers, but how long or widespread that coverage will last is a key question.

“It has been mentioned that there is no guarantee that they will even roll out Android 12 as originally designed later this year,” JupiterOne CMO Tyler Shields told TechRepublic. “The bigger concern vs. upgrade support is the ability to deploy patches for discovered vulnerabilities in a timely manner. Even if they maintain some level of support for the discontinued lines of phones, they will end up having a much smaller staff, lowering the ability to fix things quickly. This could add significant risk to those holding older phones that are not yet phased out from a support perspective.”

With the support future murky, LG users should look at upgrading their phones to avoid software vulnerabilities that could come with unsupported smartphones, Hazelton added.

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