Input 2021.04.06 06:00
Obsessed with unusual models against consumers
The sale wasn’t easy, so the business was eventually withdrawn.
LG Electronics officially announced the end of the business through the board of directors on the 5th. I came” he said. Samsung Electronics and Apple dominated the premium market, and smartphone makers such as China and Taiwan gained price competitiveness in the entry-level market.
In 2009, just before the smartphone began in earnest, LG Electronics was a global top 3 mobile phone manufacturer, selling 120 million feature phones (general mobile phones) worldwide. However, after the opening of the smartphone era, the strategy as a latecomer will fail, and the global market share will plummet to the 1% level (as of the end of 2020). We analyzed three reasons why LG Electronics mobile phones, which were once in their heyday, were bound to become relics of the old world.
① The success of the feature phone, the curse of the smartphone
“Because LG Electronics was drunk on the success of the feature phone, not only did it not want the entire mobile phone market to move to smartphones, but also tried to deny the market movement itself.
Jung-Hyun Wi, a professor of business administration at Chung-Ang University, analyzed the cause of LG Electronics’ smartphone failure on his social media (SNS). Equally late to move to the smartphone Samsung Electronics (005930)The company tried to adapt to the smartphone market by being ridiculed as a’copycat (imitation product)’ of Apple iPhone, while LG Electronics failed to deny and destroy its own success equation and success model.
Prof. Wi said that LG Electronics’ efforts to devalue the iPhone as a’typhoon in a teacup’ following the advice of global consulting firm McKinsey were politically used by the feature phone division to continue its current position.
Professor Lee Byung-tae of KAIST Business School also said, “In the case of Samsung Electronics, when the market is uncertain, it has created an opportunity for phone confusion by offering various products, whereas LG Electronics is less active and practical like Nokia, Blackberry, and Motorola.” Other companies would have restructured their businesses with trillions of deficits early, but mobile technology can create synergies with home appliances, etc. LG Display (034220), LG Uplus (032640)It seems that the decision-making has been delayed a lot because of the interests with affiliates, such as.”
② Modular/dual screen… Unusual Model Hanging Consumers Outward
Market research firm Counterpoint Research said, “LG Electronics entered the smartphone market in earnest in 2010, but it was relatively late compared to Apple and Samsung. He said, “I chose to be turned away from users.”
Samsung’s G-series, which was released as an anti-Galaxy S series of Samsung in 2013, was also aiming for a resurgence, but it is evaluated that it has reached an irrecoverable position with the modular smartphone G5, which was experimentally released in 2016. Experimental models such as the latest V50 ThinQ and LG Wing with dual screens also failed to gain sympathy from consumers. The rollable (screen rolling) phone, which LG Electronics has developed as a card to seek a reversal in the smartphone business, was evaluated as not marketable only for’raising the ransom’.
③ Even the exit strategy failed… “There wasn’t even a company that caught my eye on it.”
In the industry, there is an opinion that the sale was not feasible, so it turned to the withdrawal of the business. An official familiar with the investment banking (IB) industry said, “In general, a brokerage company selects one or two candidates as a priority and proposes an acquisition. “In the case of LG Electronics, we went through all of these procedures in the process of notifying more candidates.
In the IB industry, a message came out that a number of leading companies such as Vietnam’s Vingroup, Google, and Volkswagen were weighing the acquisition of LG Electronics. However, an official said, “The company that has actually negotiated deeply is about Vingroup, and after the public sale, the performance has not changed, as Chinese companies showed interest in the acquisition.”
It is also interpreted that this move gave the MC business division’s employees, subcontractors, and shareholders a signal that it would close the deficit business without any company seriously seeking to buy LG Electronics. Hong Seong-tae, an emeritus professor at Hanyang University’s Business School, explained, “In the case of a public sale, it is said to inform several candidates that it was for sale, but it also has the effect of proclaiming the direction that the smartphone business will be arranged to shareholders and other stakeholders. In fact, since President Kwon officially announced the possibility of the sale and withdrawal of the MC division on January 20, LG Electronics’ share price has risen from around 140,000 won to 180,000 won.
LG Electronics said, “There is no causal relationship between the sale of the MC division and the withdrawal of the business.” It was judged that it was best to decide.”