LG makes bullish in smartphone market

Under new leadership, electronics maker hopes to join top tier

By Kim Yoo-chul

LG Electronics is making stronger moves to boost its smartphone business thanks to positive reactions to new products in developed and developing markets.

With more releases, the Seoul-based consumer electronics firm expects a turnaround in its currently ailing smartphone sector by the end of the year, according to LG officials.

LG’s mobile phone business is the company’s major capital sinkhole and LG Electronics shares have halved this year, leaving it the worst performer even compared to the deteriorating Nokia and Taiwan-based HTC.

A senior LG spokesman said it has seen visible improvement in its handset division and the company has been racking up sizable returns this year.

In the second quarter, LG sold 6.2 million smartphones, accounting for 25 percent of its quarterly total of 24.8 million worldwide, according to the company.

LG had sold just 4.1 million smartphones in the previous quarter, accounting for 17 percent of the 24.5 million handsets LG sold during the January-March period.

“On a yearly basis, LG has increased its sale of smartphones sevenfold and we are tuning into it,” said spokesman Lee Hyoung-kun, Monday.

The hegemony of the global mobile phone industry has been shifting toward all-in-one smartphones, as the changing of the guard at Apple may offer more chances for rivals to chip away at LG’s initiatives in some sectors.

LG was previously limited by its scale of operations in value-added smartphones, however it appears to be back on track after LG Chairman Koo Bon-moo’s younger brother Bon-joon took the lead at LG Electronics.

It is currently the world’s sixth-biggest smartphone maker with a global share of 6 percent at the end of the second quarter of this year, according to market research firms.

But Lee said it’s been narrowing gaps and thatit was possible to further boost the firm’s share.

Many market analysts have no doubts that LG’s handset division will turn profitable possibly within this year or in the first half of 2012, though some still worry over the amount of profits after a string of quarterly losses.

“It’s been releasing more and we are gauging the right time to increase our portion of LG Electronics shares,” said a fund manager in Seoul, asking not to be identified because he doesn’t have the right to officially speak to the media.

Product mix

LG’s Optimus 2X has clearly been leading the way.

The world’s first smartphone that uses highly-advanced dual-core mobile chips has so far sold over 500,000 in the local market, though the device has been introduced via a single mobile carrier.

The Optimus 3D is another strategic variant and is the world’s first glasses-free full 3D smartphone with Tri-dual architecture.

“We’ve already acknowledged that reviving the handset division is crucial. It’s true that LG has some hurdles to clear to significantly lift our smartphone sales in the shortest time, however, one clear thing is that we are improving,” said a high-ranking LG executive, asking not to be identified.

As another gesture to regain investor confidence over the lack of smartphone models, LG has added the more affordable LG Sol to its Optimus lineup.

The handset, which targets consumers in Europe as well as the Americas, is using an improved idle-based power regulation system that extends battery life by 20 to 30 percent.

Lee said the Sol will be available in Europe in mid-September, and will make its way to Central and South America.

Its desperate efforts are expected to extend to releasing more hardware-focused mobile devices because LG is planning to launch an upgraded Optimus 3D equipped with a dual-core access point (AP).

“LG Electronics plans to release the next Optimus 3D using a 1.5 gigahertz dual-core processor this year as it has additional know-how in customizing the finer dual-core AP in its Optimus lineup,” added the executive.

And the spokesman said that’s in accordance with LG’s consistency in reviving its handset division.

For eco-systems, which are another crucial factor in the world of smart devices, LG has formed a strategic alliance with YouTube for the proliferation of mobile 3D content and mobile gaming content provider Gameloft is another key partner in the expansion of its 3D gaming content, officials said.

LG Electronics is also set to release long-term evolution-based phones utilizing dual-core CPU and high-definition displays in the local market within the latter half of 2011.

“LG was late with smartphones, however it’s faring well,” said E-Trade Securities, a local brokerage.

Mobile phone sales were 3.2 trillion won ($3 billion), or roughly 20 percent of LG’s entire sales in the second quarter.