MS seeks to mend relationship with LG
By Kim Yoo-chul
The official reason Microsoft (MS) CEO Steve Ballmer will fly to Seoul later this month is to deliver a speech at the 2012 Seoul Digital Forum (SDF).
He is not likely to make major announcements such as new investment plans in local venture start-ups but his visit is gaining attention with regard to a bigger player.
Industry executives said Monday that Ballmer’s first visit of this year might be about mending fences with LG Electronics via a high-profile meeting, possibly with its head Koo Bon-joon.
``MS has suffered from a deteriorating relationship of late with LG Electronics and many expects Ballmer will do something to correct that,’’ said an industry source requesting anonymity.
Previously, LG was one of the closest allies of MS when former CEO Nam Yong was at helm.
But the Korean firm bet on Google’s Android software for its smartphones and this soured the relationship with MS.
From the perspective of LG, handsets were also a headache as its mobile division lagged behind rivals such as Apple and Samsung Electronics.
The department, once a cash cow for the Seoul-based firm, posted losses from the second quarter of 2010 with a marginal return to profit in the last quarter of 2011.
It also faced an operating profit margin of 1.4 percent in the first quarter versus a 3.5 percent margin loss a year earlier, helped by increased sales of its high-end smartphones.
In this climate, LG is not likely to forsake Android to defect to the mobile version of MS Windows although it remains to be seen what magic touch Ballmer could bring about.
LG is currently collaborating with MS in computing-related systems, but a senior LG executive confirmed the company has no plan to release Windows-powered smartphone models in the foreseeable future.
``LG Electronics is now concentrating on Android software. We are preparing a smartphone using Windows software as part of our research and development (R&D) initiative. Rather, we are putting more focus on investing in Web OS systems,’’ said Kim In-seok, a senior executive from LG’s handset division.
LG representatives declined to comment so did those from MS Korea.
By contrast, the partnership of MS with Samsung is looking safe.
``Ballmer will hold several closed meetings with Korea’s major technology companies. But the meetings are not intended for any noticeable releases to the public,’’ said one official who is familiar with the matter, asking not to be identified, Monday.
Ballmer’s visit comes after Samsung and LG Electronics reported impressive quarterly earnings during the first three months of this year.
Officials and market analysts say Ballmer will check on key business projects that Microsoft has already played in with Samsung Electronics.
``It’s unlikely that Ballmer will meet Samsung Electronics CEO Choi Gee-sung during his upcoming visit though there is a chance the MS CEO will discuss some pending issues with LG Electronics,’’ said another official.
Not meeting doesn’t necessarily mean the partnership with Samsung and MS is worsening. The two giants are in talks to release a new tablet using MS Windows.
Samsung became the world’s biggest cellphone maker from the first quarter of this year by shipment after ending Nokia’s previous 14-year leadership. Most of Samsung’s products use Google’s open-based Android software.
``For now, Samsung is using Android to the extent it can. It plans to introduce a smartphone using Windows that also supports an advanced long-term evolution (LTE) network in the United States soon,’’ said an unnamed source from Samsung Electronics, adding tablets and PCs that adopt Windows manufactured by Samsung are set to be released within the latter half of this year.
Late last year, Samsung signed a cross-licensing with MS to use its patents in the Korean firm’s devices. The two companies are also in talks to expand their businesses toward cloud-computing systems, according to Samsung officials.