Korean electronics company LG is giving up on making smartphones after it admitted that it can’t cope with increasingly intense competition, says James Titcomb in The Daily Telegraph. The news is a major milestone as LG was an early mover in the mobile market, beginning production in 1995 and later pioneering the use of a touchscreen even before Apple launched the iPhone. While its market share peaked in 2009, even in 2013 it was still the world’s third-biggest mobile-phone manufacturer. LG’s departure adds to a growing “graveyard” of phone makers such as Nokia, BlackBerry and Motorola, which previously dominated the industry before falling away.
A penchant for gimmicks
Nonsense, says Ron Amadeo on Ars Technica. The simple fact is that its phones “were never good” as the company “ping-ponged” between “building exactly what Samsung was building – but with less marketing and brand recognition”, and “unappealing gimmick phones with no rationale behind them”. The latter included “stinkers” such as the LG G Flex in 2013, where “the entire body was shaped like a banana for no reason at all”. What’s more, LG often alienated customers with “poor build-quality” and “shoddy craftsmanship”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
More broadly, LG has suffered from the fact that the smartphone industry has become bifurcated, say Kwanwoo Jun and Timothy Martin in The Wall Street Journal. On the one hand, “high-end” devices from Apple and Samsung “can fetch $1,000 or more” thanks to the sheer power of their brands. On the other,“lower-end firms “selling handsets for just several hundred dollars have eked out profits by outsourcing the engineering and design work”. LG’s phones were in the latter category – yet its other products, such as flat-screen televisions and kitchen appliances, “compete with the top players” for cash-rich buyers. It made sense to ditch the struggling phones and focus on the top of the market in other areas.
The move is a victory for investors who called for the company to “wind down” the smartphone business, says Song Jung-a in the Financial Times. They said it constituted a “misallocation of resources”, weighing on LG’s market value despite “robust sales” of premium home appliances and televisions: the mobile-phone business “has posted cumulative losses of nearly $4.5bn over the past five years”. Free of the burden, LG is expected to shift more of its resources to the “fast-growing” electric-vehicle components business.
-
Why Trustpilot is a stock to watch for e-commerce exposureTrustpilot has built a defensible position in one of the most critical areas of the internet: the infrastructure of trust, says Jamie Ward
-
Tetragon Financial: An investment trust with stellar returnsTetragon Financial has performed very well, but it won't appeal to most investors – there are clear reasons for the huge discount, says Rupert Hargreaves
-
Why Trustpilot is a stock to watch for exposure to the e-commerce market
Trustpilot has built a defensible position in one of the most critical areas of the internet: the infrastructure of trust, says Jamie Ward
-
Tetragon Financial: An exotic investment trust producing stellar returns
Tetragon Financial has performed very well, but it won't appeal to most investors – there are clear reasons for the huge discount, says Rupert Hargreaves
-
How to capitalise on the pessimism around Britain's stock marketOpinion There was little in the Budget to prop up Britain's stock market, but opportunities are hiding in plain sight. Investors should take advantage while they can
-
London claims victory in the Brexit warsOpinion JPMorgan Chase's decision to build a new headquarters in London is a huge vote of confidence and a sign that the City will remain Europe's key financial hub
-
The consequences of the Autumn Budget – and what it means for the UK economyOpinion A directionless and floundering government has ducked the hard choices at the Autumn Budget, says Simon Wilson
-
Reinventing the high street – how to invest in the retailers driving the changeThe high street brands that can make shopping and leisure an enjoyable experience will thrive, says Maryam Cockar
-
8 of the best houses for sale with electric vehicle chargingThe best houses for sale with electric vehicle charging – from a converted World War II control tower in Scotland, to a Victorian country house in Cumbria
-
Big Short investor Michael Burry closes hedge fund Scion CapitalProfile Michael Burry rightly bet against the US mortgage market before the 2008 crisis. Now he is worried about the AI boom
