Virendra Pandit
New Delhi: In global and local businesses, products are usually launched with much fanfare, but a company officially announcing a complete withdrawal of products from the market is a rare phenomenon.
South Korea’s LG Electronics Inc., has become perhaps the first company to announce the withdrawal of its loss-making smartphone from the global market altogether.
On Monday, the company said it will wind down its mobile division, making it the first major smartphone brand to completely withdraw from the market, media reports said.
Although LG smartphone’s global market share is only 2 percent, in North and South America, it was the number three and five brands, respectively. Its decision to pull out will leave its 10% share in North America to be cornered by smartphone majors Apple Inc., and Samsung Electronics.
In the last six years, LG’s mobile phone division has incurred huge losses to the tune of nearly $4.5 billion. With the company now dropping out of the fiercely competitive sector, it will focus on electric vehicle components, connected devices, and smart homes, it said in a statement.
LG was an early bird to fly into the mobile phone market with a number of cell phone innovations, including ultra-wide-angle cameras, and was, in 2013, the world’s third-largest smartphone manufacturer behind Samsung and Apple.
However, its flagship models suffered from both software and hardware mishaps which, combined with slower software updates, saw the brand steadily slip. Experts criticized the company for its lack of expertise in marketing compared to its Chinese rivals.
With its global market share being only about 2%, LG shipped only 23 million phones last year, as compared with 256 million for Samsung, media, quoting researchers, said.
In South America, Samsung and Chinese companies like Oppo, Vivo, and Xiaomi are expected to benefit in the low to mid-end segment, reports said.
LG’s sudden crash is amazing as some other well-known mobile brands such as Nokia, HTC, and Blackberry also fell from lofty heights, but they never disappeared completely.
LG’s smartphone division, the smallest of its five divisions which accounted for about 7% of revenue, is expected to be shut by July 31.
In South Korea, the division’s employees will be moved to other LG Electronics businesses and affiliates while elsewhere decisions on employment will be made at the local level.
LG will provide service support and software updates for customers of existing mobile products for a specific period of time-varying on region, it added.
