LG outsources loss-making mobile phone business to focus on high-end devices

[Shawn Knight]

Editor's take: LG Electronics addressed its loss-making mobile phone division on Monday with a massive restructuring that impacts virtually every facet of the business. Some may say that it's a case of too little, too late, or that it is a last-ditch effort (neither of which may be wrong), but at least they are taking steps to address the matter.

The company confirmed to Reuters that it will be outsourcing low and mid-range handsets to an original design manufacturer (ODM). This simply means that a third-party company will design and manufacture devices and LG will slap their branding on the resulting products.

A spokesperson further told Reuters that some research and production positions had also been eliminated, while others have been reshuffled. The moves should help the company better focus its efforts on building premium smartphones like the recently launched LG Wing.

The South Korean electronics maker was once among the top three smartphone makers in the world, but that was many moons ago. Today, the company isn’t even in the top seven. According to the publication, LG’s mobile business has reported an operating loss for 22 straight quarters.

Tom Kang, an analyst at research firm Counterpoint, said LG is trying to add to its lower-end models’ value for the price by using ODMs. “But even if LG sources its products, without marketing ability, it cannot win against Chinese firms who are good at it,” Kang added.

Masthead credit: Grzegorz Czapski

Permalink to story.

https://www.techspot.com/news/87879-lg-outsources-loss-making-mobile-phone-business-focus.html

 

[Theinsanegamer]

LG has long suffered from build quality issues and a lack of direction. They had the last high end phone with a replaceable battery on the market, and decided to chase the "thin glass $1000 phone" market that everyone else was loosing money in.

Look at lenovo. They concentrated on phones that had a truly unique feature (the Z series) and giant batteries (the E and G power series) and both have been successful, lenovo makes an actual profit.

 

[Steve Lalancette]

They should start by updating their existing phones sold on the market and we'll see...
I bought a LG phone last year, and I never received ANY update, in Canada, for this phone model.
In other countries, like USA or France, this phone model is already on Android 10... But not in Canada.

 

[Mr Majestyk]

Here's a few ideas:

1) Fix your pathetic support. Slowest to offer updates and they literally violate the open source terms by not making kernel source available. Increase your update life to at least 3 years but since you are struggling make it 5 years to distance yourself from Samesung.

2) Acknowledge hardware faults and fix you crap QC.

I've had 3 different LG appliances and a phone all have serious issues or totally fail and will never buy their crap again. Lucky Goldstar is still alive and kicking.

 

[Endymio]

LG has long suffered from build quality issues and a lack of direction.

True enough. But remember, Lucky Goldstar exists simply to allow South Korea to be able to claim it's not a subsidiary of Samsung.

 

[nismo91]

reported an operating loss for 22 straight quarters

don't you think they should've stopped doing whatever it is they're doing when it was still 4 straight quarters? nahh I think they are happy to continue to make losses until their 40th straight quarters.

for reason unknown my LG G4 is still alive and kicking (mobo was replaced in Dec 2016 under warranty) and I used it every single day specifically for video calls for hours plugged into the charger. it just refused to die. so yes I still have a soft spot for LG thinking that maybe one day they woke up and start being a noteworthy competitor to Samsung again. one can only dream.

 

[Nobina]

I don't think these prototype-like phones like the Wing will do more than catch a few YouTube videos. I had one LG phone, the G2, and it was pretty good until it was sliding down the stairs out of my pocket.

 

[Endymio]

don't you think they should've stopped doing whatever it is they're doing when it was still 4 straight quarters? nahh I think they are happy to continue to make losses until their 40th straight quarters.

Amazon ran nearly 60 straight quarters of losses.

A special case, perhaps, but the number of businesses which have turned a product line into a blockbuster after many more than 4 losing quarters is innumerable.

 

[Porkous]

Well... LG is one of those tech companies that you think of as bringing innovative high tech stuff, other companies don't have. Why every other company has your tech? I mean, OLED was the thing that attracted the most enthusiasts toward LG, but that's what you don't differentiate yourself with, anymore. OLED is amazing and LG is not holding the hallmark of the highest tech in this area, in phones, at least...

 

[Makste]

My LG V20 is still doing great. LG shouldn't try to out compete Samsung or anyone else, its products are good enough, it should just refine them.

 

[nismo91]

Amazon ran nearly 60 straight quarters of losses.

A special case, perhaps, but the number of businesses which have turned a product line into a blockbuster after many more than 4 losing quarters is innumerable.

I doubt it. amazon was famous for their losses back in 98 all the way to 04 which was less than 20 quarters. that was like 2 decades ago mind you.

a lot of business can turn their business around, yes, but things are not very bright for a big tech company in 2020. LG Mobile's future is just as dim as Sony Mobile's.

 

[Endymio]

I doubt it. amazon was famous for their losses back in 98 all the way to 04 which was less than 20 quarters. that was like 2 decades ago mind you.

They were founded in '94, and ran a loss from startup. So I'll split the difference with you: ~32 unprofitable quarters.

To arrive at that "nearly 60" figure, I was thinking of the time for them to show a cumulative profit, which was of course incorrect in this context.

LG Mobile's future is just as dim as Sony Mobile's.

Sony Mobile just showed a profit last quarter.

 

[nismo91]

Sony Mobile just showed a profit last quarter.

From the source

Sony has confirmed that it now expects the Mobile Communications business to post its first yearly profit in four years when it announces fiscal 2020 (April 2020 – March 2021) financial results in April 2021.

we'll see. 4 months to go now.

 

[Endymio]

we'll see. 4 months to go now.

Good catch. I stand corrected.

 

[nismo91]

Good catch. I stand corrected.

LOL. you will be correct if they kept making enough profit until March 2021 to be able to validate "first yearly profit". today we're still in December 2020 fyi