SMARTPHONE SHUTDOWN: LG is one of the most iconic brands in
the world as they produce everything from washers and dryers to smartphones and TVs. For decades,
they were the pride and joy of South Korea along with Samsung, and they still very much hold that
status within the country. But, outside of South Korea, LG has had a rough couple of
years especially with smartphones. For years, LG was trying to break into the smartphone space and
establish themselves like Samsung and Apple. But, year after year, LG walked away with a bigger and
bigger loss. During the worst of it, LG was down $4.5 billion within a matter of just 6 years. And
the reality was that they could only justify such losses for so long and eventually they wanted out,
so they started looking for buyers. But, no one wanted a money pit that needed to compete against
Apple and Samsung. So, with no choice left, LG decided to make the hard decision to completely
scrap their smartphone business in April of 2021. But, LG’s outlook wasn’t always so pessimistic.
At one point, it seemed like LG was here to stay given their massive presence. For example,
LG became the world’s third largest smartphone maker back in 2013, and they held this title
within North America until the day they shutdown. And it’s not like LG was stagnating or getting
too comfortable either. If anything, they were doing the exact opposite as they were constantly
innovating and taking chances. In fact, LG was actually the first company to make a capacitive
touchscreen phone way back in 2006. They followed this up with flexible OLED displays in 2014,
modular smartphones in 2016, ultra wide cameras in 2016, dual screen phones in 2019,
and swivel phones in 2020. We should also note that LG wasn’t set on trying to maximize profits
and screw over customers either. They not only kept the headphone jack for 1-2 years
longer than everyone else, but they even tried improving it by integrating a Quad
DAC into their phones. From the outside, it seemed like LG had literally everything going
for them. They were a household name with a bunch resources and they were constantly
trying to outdo not just the competition but themselves. So, what happened to LG?
NON EXISTENT MARKETING: Taking a look back, LG’s eventual demise can
be traced back to their very first “smartphone”: the LG Prada back in December of 2006. As we
previously touched on, the Prada was the first phone to ever have a capacitive touchscreen,
and LG was even suspicious that Apple had ripped off their design. But, you’ve probably never even
heard of this phone which brings us into LG’s number one mistake: non existent marketing.
This was likely a trait that LG brought with them from the appliance space. With refrigerators and
washers, marketing is not exactly one of your top concerns. For most people, these are necessities
that they only buy when their old ones break. You know, it’s not everyday that you think:
Woah LG just dropped their latest dishwasher. I better put in a preorder before it’s too late. No,
with appliances, the key isn’t over the top marketing. The key is strong availability,
offering great value, and having a reputation for reliability. Practicality sells appliances,
not showmanship. LG approached the smartphone market with the same mentality. They figured that
if they could just make a strong product, people would be lining up to buy their phones. But,
the key difference between appliances and smartphones was that one was a necessity
and the other was a luxury atleast back in the day. With smartphones, people wanted something
that was desired, something that was exclusive, something that gave them social status. Apple
offered exactly this. They had their massive keynotes that garnered tens of millions of
views. Even if you had no intention of buying an iPhone, you knew about the new one that Apple just
released. And the people who wanted them? Well, some of them would wait for literal days outside
Apple stores to be the first ones to get the new iPhone. What did LG do on the other hand? Well,
they dropped smartphones as if they were iOS updates. Actually, no wait, I take that back.
iOS updates actually get more press. The LG launch events took place during Korea time
which made it hard for western audiences to tune in. But, it wouldn’t matter even if they did tune
in given that LG didn’t build any tension or hype. Their phones would become available in
Korea the exact same day. Also, there wasn’t any sort of synchronized international launch. The
launch dates for America and Europe were simply when logistics channels could get them there,
and oftentimes, this was months. Again, this seems to be a lingering attribute of their appliance
business. People don’t hold out on buying a stove because a new one is just around the corner. So,
the specifics of when a new product made it’s way to western markets didn’t really matter.
With smartphones, however, people want the latest and greatest. In fact, many people hold out for
several months just so they can get the latest right when it drops. I know you’re watching. So,
much of LG’s success in the smartphone space in the early days simply came from the fact that
they were already an established cellphone maker and brand. But, other than that, they didn’t have
much going for them, and when more competition entered the scene, they would feel the squeeze.
GIMMICKS: As the smartphone market continued to mature,
we started to see smartphones transition from being a luxury to being a necessity. This gave
rise to a whole new demographic of people who were just looking for a practical value device.
Companies like Google, OnePlus, Xiaomi, and Huawei have basically built their entire smartphone
business around this market. You would think that this was the perfect opportunity for LG. They were
already in the space making practical devices, so all they had to do was double down and pump out
some marketing about how much value they offer. But, LG obviously didn’t do that. You see, in
2012 and 2013, LG finally realized their marketing blunder. They needed to make LG smartphones the
latest and greatest, and they needed to make them unique, special, and exclusive. With that in mind,
they decided to go after the premium market which isn’t a bad thing. LG had a shot at taking
on Samsung and maybe even overtaking them, but while LG had the right idea, they also kind of
didn’t. LG was right in that they had to offer the latest and greatest. But, they were wrong
in thinking that they actually had to make the latest and greatest. Whether we’re talking about
Mercedes or Apple, the key to making the latest and greatest isn’t to actually make the latest and
greatest. The key is to make a strong product and pair it with exceptional positioning. LG,
however, approached this from a literal sense and incorporated some wacky stuff into their phones.
A few of their experiments actually turned out to be trend setting. For example, the LG G5 was the
first smartphone to sport an ultrawide camera way back in 2016. Since then, ultrawide cameras have
become a standard amongst premium smartphones. But, most of LG’s experiments didn’t play out
quite as well starting with the LG G Flex in 2013. Around this time, curved TVs were a hot thing,
so LG figured that they should bring this feature to smartphones. But, this choice ended up aging
as well as curved TVs themselves. Soon after, we saw the LG V10 in 2015. This phone came with
two unique features. One, the phone had two front facing cameras, and two, the phone had a secondary
screen at the top that displayed a taskbar type of thing that never really caught on. Moving forward,
we saw the LG G5 in 2016. The selling feature of this phone was the fact that it was modular.
During a time when everyone was following the Apple way and preventing smartphone upgrades,
LG decided to give choice back to the consumers. But, LG’s partners never pulled through and
put out accessories that made the modularity actually worthwhile. Nonetheless, LG continued
pushing forward. They introduced a dual screen phone with the G8X and a swivel phone with the
LG Wing. But while these features made LG phones as expensive as iPhones, they didn’t make them
as appealing as iPhones. LG simply became known as the smartphone producer with the gimmicks.
GETTING DESPERATE: As losses continued to pile up at LG, they
naturally became more desperate. Their gimmicks became more outrageous and their focus became more
tunnel visioned. Everything centered around: how do we get more attention and how do we sell more
units. This makes sense given that volume was by far their biggest pain point. They simply weren’t
able to sell enough units to make up for their monster R&D expenses. So, they naturally shifted
all their focus into garnering more sales. From a macro perspective, this was a great choice given
that this is exactly what LG had been lacking for so long. But, unfortunately this came with the
cost of sacrificing current users. LG started to drop the ball when it came to software, hardware,
and UI optimization. For example, while LG phones had massive batteries on the spec sheet, the real
world performance was average at best due to the phones being so inefficient. Software updates also
became few and far between, and several LG phones were plagued with bootloop issues. It didn’t take
long for LG to become infamous for their software issues, but these issues didn’t just stop at
software. LG started having hardware issues as well. On the LG V20, for example, the camera glass
was for some reason extremely fragile. LG phones were also plagued with battery overheating issues,
microphone issues, network issues, and fingerprint sensor issues. LG’s whole business was centered
around making practical electronics, but somehow, their new smartphones were anything but practical.
And to make things worse, it didn’t seem like LG was truly trying to fix any of this either. They
had gone so far down the latest and greatest rabbit hole that all they seemingly wanted to
do was create something that was super out there and garner the attention of the media. The purpose
of their new phones were to simply get you to buy. They didn’t care about your experience using the
phone or your feedback. This strategy may work alright if your selling products that people only
buy once. But, with phones, people are constantly replacing them every few years. Not to mention,
people use their phones for hours every single day, so it didn’t take them long to notice. LG
did eventually try to make it up to customers by offering super long warranties. For the
phones affected by bootloops for example, LG offered warranties for up to 30 months. But,
this is not the type of impression that you can reverse. Once people believe that
LG phones offer a crappy experience, they’re gonna hold that belief forever. And now that
even LG’s existing users were turning on the company, their fate was sealed.
THE STATE OF LG: In the end,
LG is a perfect example of: just because you’re successful in one industry doesn’t mean that
you’ll be successful in another. Throughout their entire smartphone run, they were constantly at the
wrong place at the wrong time. In the early days when the market was filled with luxury buyers,
LG’s marketing and positioning simply wasn’t up to par. Then, when the general market joined the
scene, LG finally decided to go after the premium market, but not strong marketing,
but with out there gimmicks that rarely hit. And finally, LG became so desperate on getting new
sales that they started completely ignoring their core market of existing users. With such fatal
flaws, it’s no wonder that after 15 years in the smartphone industry, all LG had to show for it was
billions of dollars worth of losses and hundreds of millions of angry customers. Looking forard,
it doesn’t seem like LG will be restarting their smartphone business anytime soon. In fact,
the company is doing better without smartphones, so it’s probably best that they stick to what
they’re good at. But hey, while LG wasn’t able to make it within the smartphone space themselves,
we may very well see many of their gimmicks make a comeback in a much better way, but only time will
tell. Did you ever own an LG smartphone? Comment that down below. Also, drop a like if you hope LG
smartphones rest in peace. And of course, consider checking out our discord community to suggest
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