Can LG survive when Apple & Samsung dominate the 2021 Smartphone market?

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The latest news that LG may be considering exiting the smartphones market in 2021 has largely gone unnoticed but does merit some discussion. As many of you know I spent six years managing the launch of over 20 mobile devices and 100s of apps at one of the big US mobile operators so this one hits close to home. Over the last 10 years we have seen HTC, Microsoft, BlackBerry, Nokia, Palm and Sony either exit the industry or live on life support. Apple and Samsung lead the US Smartphone market with a share of 46 percent and 25 percent respectively, as of the second quarter of 2020. Next to Apple and Samsung are LG and Motorola/Lenovo, with market shares of twelve and seven percent per a report published by Statista in September 2020.

Is there any more room on the on the virtual store shelf?

AT&T, T-Mobile and Verizon rely on Samsung and Apple for the bulk of their mobile sales in consumer channels. Looking online the percentage of retail Samsung and Apple SKUs for each carrier are as follows: AT&T (Samsung: 36 percent, Apple: 25 percent); T-Mobile (Samsung: 32 percent, Apple: 22 percent) and Verizon (Samsung: 41 percent, Apple: 28 percent). LG is 15 percent at AT&T, 17 percent at T-Mobile and Verizon is at eight percent. Losing a device OEM like LG does matter! Less device OEMS will lead to less customer choices, less competition, and higher prices.

Are we at the zenith of the smartphone revolution?

Today Samsung and Apple have segmented the market, and each dominate their respective OS. The rate of innovation is good but has slowed over the last 5 years as device OEMS have focused on camera technology improvement as the main differentiator aside of their OS updates.


Samsung and LG have launched new form factors in product design (Samsung Galaxy Z Fold and Flip; LG V60 Dual Screen and WING) but most of their sales still come from traditional black slab designs.


Not long ago the top end of the flagship device pricing was $700 and today we are at $1400 depending on memory configuration and does not include a charger.

No, we are not even close to the final design for Smartphones as screens are getting bigger, thinner and yet still manage to provide great battery life. We may however be reaching the point on how much customers are willing to pay. Samsung has done a great job in filling this gap with their line of Galaxy FE devices that retail for about $700 but that is still too much for many families that purchase four devices every two to three years and always seemingly on a payment plan. So indeed, there is an opportunity for a device OEM like LG with good brand recognition to bring devices targeted at a lower price tier of $400-600.

How did we get here?

Not long ago the top end of the flagship device pricing was $700 and today we are at $1400 depending on memory configuration and does not include a charger.

LG, HTC and other smaller device OEMs are willing to innovate but do not have the marketing and engineering budgets to compete with Apple and Samsung. The cost to launch a new smartphone with a mobile operator in the US is expensive with marketing development fund requirements that are in the millions. The cost to design, build, test and certify a new device can run in the $2-5 million range. Some of these device OEMs have been slow to rollout new OS and security updates. In addition, device OEMs that do not have a combination of a robust mobile app marketplace, streaming services (Apple TV), music, photo and cloud services are disadvantaged. LG remains the best manufacturer in the world for Smart TVs thanks to its strong line of OLED TV and Smart Home Appliances but has not been able to marry its mobile device with these experiences that are unique. Further consolidation of the US mobile operator industry and less device OEMs has the potential to lead to less innovation and higher prices as we have seen with many other industries.


So, what is next?

Not long ago the top end of the flagship device pricing was $700 and today we are at $1400 depending on memory configuration and does not include a charger.

First, Kudos to Samsung for raising the bar to support devices up to three generations of Android OS upgrades in 2020. Second, thank you Apple for offering your customers up to six years of iOS support. Third, Industry wide phone warranties need to be extended to a minimum of two years as device prices continue to increase and customers are keeping their devices longer. Sonim Technologies and Kyocera already offer three-year and two-year warranties, respectively. Fourth, LG should continue to build a flagship device that leverages its Smart Home Appliance and Smart TV business. The challenge will be working across two OS (WebOS and Android). Fifth, LG should focus on building the best smartphone for the money that is targeted at the middle tier market segment discussed earlier. There is a drastic drop off in device specifications that just screams cheap when looking at this tier today. Finally, LG needs to look for new ways to market and sell their devices that are less reliant on the mobile operator channels. Many mobile operators have cut down the number of retail stores and stocked SKUs. Let us hope that LG and other struggling device OEMS can bring high quality products to market with compelling features that help them stay competitive and profitable. Hang in there LG.

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