Posted : 2010-06-23 17:36
Updated : 2010-06-23 17:36

LG widening gap with rival Sony in TVs

LG Electronics’ Infinia LED-backlit LCD television has been praised by CNET Reviews for its advanced technology. By applying region-by-region detailed strategies and aggressive promotions, LG plans to widen the gap with Japan’s Sony and overtake Samsung Electronics in market share. / Korea Times

By Kim Yoo-chul
Staff reporter

LG Electronics is trying to maintain its bull power in its television business ― one of the key growth drivers with mobile phones ― thanks to the global demand surges for flat panel liquid-crystal display televisions and an increased corporate recognition in LG's key markets.

In detail, the Seoul-based consumer electronics maker is widening the market gap with its biggest Japanese rival.

LG is also rapidly narrowing the differences with the sector leader Samsung Electronics buoyed by the brisk sales of its LED-backlit LCD televisions.

Its strategy shift towards selling pricey products such as three dimensional televisions, large-sized TVs, as well as LED-backlit LCD TVs has begun paying off, offsetting worries over macro troubles in Euro Zone and strengthening greenback, company executives say.

"We are on the safer route to achieve this year’s 25 million LCD TV sales target and to eat up 25 percent of the global 3D TV sector," Kwon Hee-won, executive vice president of LG Electronics said.

Kwon, who is also the head of LG’s LCD television unit, has said a growing number of consumers are paying for more premiums to buy LG-branded high-end televisions in its target regions and added the second quarter will even better in terms of shipments.

"Markets are always challenging. Therefore, we don't worry too much what happens in Europe and currency moves. The one clear thing is LG's TV business has entered into the growth phase," according to the executive.

The remarks came after LG has passed over the Tokyo-based Sony to become the world’s No. 2 in terms of revenue for the first three months of this year.

It is the first time ever that LG has destroyed the credibility of the Japanese company by revenue since it started its television business decades ago.

LG captured 13.2 percent of global share in LCD televisions by revenue during the period, while Sony has been suffered a slide of its shares by 2.8 percentage points to remain at 11.3 percent, according to the data released by the market research firm DisplaySearch.

The "revenue measurement" is regarded as a comparable guideline to gauge the credibility of brand awareness of a certain company as consumers usually pay for their favorite brands when to buy consumer electronics products.

Among the "big 3" in televisions, LG was also the winner. In overall televisions sales, it has been expanded the gap with Sony by 9.7 percent from 6.3 percent a quarter earlier.

Also, LG has narrowed the gap with the leader Samsung to 1.7 percentage points, the research firm said.

In LED-backlit LCD televisions, LG’s global share broke 10 percent level for the first time to reach at 10.8 percent in the first quarter, while Samsung has seen a drastic decline of the shares to 35.1 percent from 66.9 percent quarter-on-quarter.

"Situations look quite healthy for LG's television business, considering the healthy demand for digital devices in China, North America and other regions amid the economic recovery and an increased brand recognition," an analyst at U.S.-based brokerage said, asking not to be identified.

Implementing aggressive strategies

Of some reasons to see LG’s uprising track in televisions are that it has detailed strategies and moreover the company actually implementing updated plans.

LG is strengthening partnerships with major content providers for better management of its 3D televisions.

LG is showing aggressiveness in promotions for its newer televisions in key spots but with customized and localized plans.

The company is also reviewing the possibility to make a debut of its ``smart TVs’’ amid the sector’s convergence move but upon market situations.

Such consistencies are helping LG get more credentials of its products in renowned publications.

LG said its Infinia-branded LED-backlit LCD TVs, which are currently selling in the United States, got the highest mark by CNET Reviews thanks to melted advanced technologies ― local dimming, sleek and slim design, values, brightness and the functionality to realize deep black color.

With confidence in product quality, competitive brand images and various lineups, LG is in talks with large Japanese electronics retailers about re-entering the Japanese flat-panel TV market ― a home-turf of Sony.

Although LG spokesman Choi Joon-hyuck declined to comment, it has been known LG to introduce TV models with LED backlighting. Models with 30- and 40-inch screens are under consideration for the Japan debut in addition to regular LCD TVs.

LG had previously marketed 20-inch and other smaller LCD TVs in Japan, but halted the sales in 2008 amid fierce competition with well-established Japanese brands.

``That’s an old story. We are positive to make some cracks in Japan’s premium television sector,’’ another LG executive said.

``The core value is how we actively respond with the needs from markets and consumers. In `smart televisions,’ LG will take some more time for satisfactory results,’’ Kwon of LG said.

Analysts have no big questions over LG’s long-term growths in television business but said margins of the division is likely to fall in the second quarter hit by widened foreign exchange losses and lower TV shipments.

``It does make sense that LG’s television business has been under the growth phase. LG has understandable strategies and the point is how it will update and react quickly at a time when Sony and even Samsung hope to stride the way with the latest products,’’ said Kang Yoon-heum, an analyst at NH Securities.
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