Optimus G turns LG fortunes around

LG Optimus G

By Kim Yoo-chul

Koo Bon-moo LG Group Chairman

Over the last three years, LG Electronics had fallen behind because of its late start in smartphone development.

Some even worried that it would go the way of Nokia in an industry that has been dominated by Samsung Electronics and Apple.

Then came the “LG Optimus G.”

It is probably the best-ever LG smartphone and features very advanced hardware specifications. This has turned LG around, although there is still a long way to go to catch up with Samsung and Apple.

“This smartphone is loaded with a plethora of features that will surely entice anyone who is remotely interested in smartphone technology,” said company spokesman G.W. Kim.

The Optimus G is a result of collaboration with LG’s leading technology affiliates — LG Display, the group’s display-making unit, supplies screens; LG Chem provides advanced batteries; while LG Electronics produces the finished sets. It is very rare for LG affiliates to collaborate on a single project.

“That’s because the Optimus G was initiated by LG Group Chairman Koo Bon-moo. In line with the chairman’s key initiatives to develop more market-leading products, LG put all its resources into the phone,” said LG Group spokeswoman Kim Min-jeong.

The smartphone is lifting LG Electronics’ corporate business and the phone’s impressive sales are fueling more investor confidence in group-affiliated stocks.

In the fourth quarter of 2012, LG Electronics saw a turnaround in profit for the first time in three years. Its mobile communications division, which handles the smartphone business, reported a 58.6 billion won operating profit in 2012, up from 275 billion won in operating losses that it had suffered in the previous year.

LG announced recently that it has sold 1 million Optimus G phones since its launch in August.

As the first 1.5-gigahertz quad-core LTE smartphone to utilize Qualcomm’s latest Snapdragon S4 Pro APG8064 processor, the handset not only offers a blazing fast performance, but also a longer battery life, thinner profile, brighter display and a new touch-screen panel technology as a result of the vertically-integrated development process.

The phone has been treated equally alongside the Samsung Galaxy S3 and Apple iPhone5 in evaluations by Consumer Report in the United States. LG started its global roll-out of the handset in more than 50 countries this month.

“Thanks to the G’s success, we are seeing a more can-do spirit among all LG employees. We can say this is a chairman effect,” said a 35-year-old employee at LG’s main local factory in Pyeongtaek, Gyeonggi Province, by telephone.

In a report to clients, Fitch Ratings said LG Electronics’ margins will remain stable this year backed by its solid market positions in the TV and appliance businesses, as well as the gradual recovery in its smartphone competitiveness.

“Within LG Electronics’ smartphone business, Fitch forecasts that recovery in margins and market share will be slow but steady, due to the improvement in quality and brand recognition,” said Alvin Lim, an analyst at the British credit-ratings agency.