South Korean giant LG announced Monday that it will emerge from the « highly competitive » smartphone sector by closing its smartphone unit, marking the end of an era for a company that was once one of the first in the smartphone industry.
Its decision underscores how difficult it is to compete with industry giants such as Samsung and Apple, particularly in the United States, the third largest smartphone market.
LG was among the top 5 smartphone manufacturers. But it failed to hold on as Samsung and Apple dominated the U.S. market, and companies such as Huawei and Xiaomi captured market share outside America.
Both Apple and Samsung account for 81% of the U.S. smartphone market, with Apple accounting for 65% and Samsung accounting for 16% according to Counterpoint Research statistics in the fourth quarter of 2020.
Meanwhile, LG ranked third with only 9% of the market, and Samsung and Apple were the only smartphone companies to show growth in the United States in the fourth quarter of 2020.
Globally, Apple ranked first in the fourth quarter of 2020 with 23.4% of the market, while Samsung ranked second with 19.1%, according to International Data Corp.
Galaxy S3 Black Horse
Samsung and LG are long-standing traditional rivals in the electronics and home appliance industries, but there is one important advantage LG lacks when it comes to smartphones.
Samsung established its phone reputation as the main competitor to iPhones when the smartphone market was still young in 2012. At the time, it was a huge success with its Galaxy S3, which surpassed the iPhone 4S to become the best-selling smartphone in 2012, according to Strategy Analytics.
The successful launch of the Galaxy S3 helped create the story that the smartphone market has become a race between apple and Samsung.
Major headlines such as The New York Times, Vanity Fair and The Guardian have reported that the two technology giants are the winners, making it the biggest shift in recent history.
No Android phone maker had anything approaching the popularity of the Galaxy S3 at the time. The Galaxy S series put Samsung on the map, making it iPhone’s main competitor for years to come.
Other Android phone makers have simply not been able to keep up, although in some ways they are more creative. For example, technology critics praised HTC in 2013 on its eye-catching One M7 phone, which outperformed every Android phone on the market in terms of design quality. But it had no sales to match that reputation, and HTC sold a large part of its smartphone business to Google in 2018.
Even Google, which is talking about Android, has had difficulty breaking into the smartphone business. It has turned to selling cheaper Pixel smartphones after having trouble selling sophisticated phones designed to compete with the iPhone and Samsung Galaxy S.
LG has taken a similar path. It has been ahead of competitors in some respects, such as its decision to bring wider-field cameras to its smartphones years before Apple and Samsung did so.
But the smartphone division suffered losses totalling $4.5 billion over six years, leading to the decision to close the unit after Bloomberg reported that the electronics maker had failed to find a buyer.
LG will instead focus on areas such as smart home appliances, electric car components, robots and artificial intelligence.
Of course, samsung and Apple’s success is one of the factors that influenced the mobile market, and despite the importance of this factor, data from Gartner, which specializes in market statistics provided, indicated that popular Chinese brands with popular prices, such as Huawei, Xiaomi, Oppo and OnePlus, also rose in popularity as LG’s market share began to slide in early 2015.
Despite this Chinese competition, Samsung and Apple have been comfortably at the forefront of the smartphone market for years, and LG has fallen victim to this competition after Google and Microsoft.