Tuesday, August 26, 2008

South Korea - the rise of LG handsets

LG Mobiles Rise with a Vengeance

LG Electronics has recorded an outstanding performance in the global mobile phone market recently, in sharp contrast to its loss two years ago. LG has performed exceptionally well in sales for six straight quarters since Q1 2007.
LG’s Pyeongtaek plant has produced one global hit after another, starting with the Chocolate Phone (November 2005), to the Shine Phone (October 2006), Prada Phone (March 2007), Viewty Phone (November 2007), and Secret Phone (May 2008).

All are expensive, priced on average at more than W600,000 (US$1=W1,079). The Prada Phone is still selling at its initial price of W880,000. In the past, the byword "LG-ish" in referring to its mobile phones implied minor malfunctions and room for sophistication in the finishing touches of the products. But that has changed.

◆ No longer cheap and inferior

Following the Chocolate Phone, of which it sold nearly 20 million units, LG released the Prada Phone, its most expensive phone at that time, simultaneously in domestic and overseas markets. Its touch-screen style function stunned a skeptical industry. The question was whether LG could survive in the high-end market. But LG surprised them all.

Industry insiders were again skeptical when LG produced the Viewty Phone, another high-end handset. It is equipped with a sophisticated camera, contrary to the common wisdom that a camera phone is no match for a real digital camera. The Viewty has a 5 megapixel lens and a hand-shaking correction function to guarantee clear pictures. As a result, the handset sold like hot cakes, with 2 million units flying off the shelves in just nine months.

◆ Can LG beat Samsung?

In the second quarter 2008, LG Electronics' mobile phones finished second in the North American market after Motorola but ahead of Samsung Electronics. Operating margin was 14.4 percent for the period, again outdistancing Samsung’s 12.7 percent. LG has ranked first in the global CDMA mobile phone market for six consecutive quarters. Some market analysts say there are signs that LG's mobile phone unit can overtake Samsung Electronics.

But others also say LG mobile phone has not created a solid image on its own. "There's still a long way to go,” admits one LG executive. The company has not advanced into the global market as extensively as Nokia, he says, nor built as strong an image as Samsung in the Korean and Chinese markets. "We're concentrating our energy on emerging markets such as India and China,” he said. “We're also reinforcing our manpower in the marketing division, which is thought to be our weakest point."

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