On Monday, South Korea’s LG Electronics Inc mentioned that it will soon wind down its loss-making mobile division. Well, it is a move that is set to create the first major smartphone brand that completely withdraws from the market. Its decision is to pull out that leave its 10% share in Northern America where the number 3 brands to be gobbled by the titans of the smartphone Apple Inc and Samsung Electronics.
Currently, in the statement, it mentioned that the division has met almost six years of losses which are reaching somewhat $4.5 billion and dropping out of the aggressive competitive sector which might allow LG to aim at the growth areas like electric vehicle components devices and smart homes.
LG was basically early to market with comparatively a number of cell phone innovation that involves ultra-wide-angle cameras. This was once in 2013, the third-largest smartphone manufacturer leaving behind Apple and Samsung.
On the other hand, its flagship models have suffered basically from both software as well as hardware mishaps that make a combination of slower software updates that highlight the brand progressively slip in favor. Notably, the analyst has criticized the company for lack of expertise in marketing when compared with the Chinese rivals.
Presently, its global share is around 2%. Further, it is shipped 23 million phones in the last year that compares with 256 million for Samsung, as per the research provider Counterpoint. Additionally, it does have a sizeable presence in Latin America where it ranks as the No.5 brand.
Park Sung-soon, an analyst at Cape Investment & Securities said, “In South America, Samsung and Chinese companies such as Oppo, Vivo, and Xiaomi are expected to benefit in the low to mid-end segment.” Other renowned mobile brands like Nokia, HTC, and Blackberry have now fallen from the lofty heights which have disappeared almost. However, LG’s smartphone sector which is the smallest of its five sectors gains around 7% of revenue, and it is expected to be wound down by 31st July.
In South Korea, it is assumed that the division’s employees will be soon shifting to the other LG electronics businesses. Moreover, LG has decided to provide continuous service support and software updates to the consumers of the existing mobile products for a certain period based on the regions. It is planning to sell part of the business to Vietnam’s Vingroup which fell through because of the difference in terms, sources with knowledge of the matter.