LG Cuts Phone Sales Forecast As Competition Bites

Earlier this year LG Electronics officials had been planning an aggressive expansion of their smartphone portfolio. But now it seems they are cutting their smartphone sales projections by 20 percent, after losing business to such competitors as Apple and Samsung.

Park Jong Seok, head of LG’s mobile business, told reporters at a media briefing 7 July that the company now expects to sell 24 million smartphones, down from the 30 million it had forecast earlier this year, according to a Bloomberg News report.

The lowered forecast is the latest hit taken by the mobile phone unit at LG, which is currently the world’s third-largest mobile phone maker. In the first quarter of the year, the unit lost $94 million (£59m), marking the second consecutive losing quarter. Park said the business is improving, though he was unclear when it would begin turning a profit again, according to the Bloomberg report.

Product Churn

“It’s hard to give an exact timing, because there are so many market variables, and the situation changes quickly,” he said, according to the news organisation.

The South Korean phone maker launched an aggressive campaign early this year, starting with the 2011 Consumer Electronics Show in January, where it unveiled – among other devices – nine new phones, most of them running Google’s popular Android mobile operating system. At the time, LG officials said it was crucial for the company to continue rolling out new devices to meet changing demands.

“In an ever-changing wireless industry, it is vital that we continue to listen to the voice of our consumers and develop devices that meet their growing needs,” Tim O’Brien, LG’s vice president of marketing, said in a statement. “LG is dedicated to providing users with products that embody the latest in innovation and consumer benefits.”

3D Handset

LG’s lowered estimates were announced at the same time the company unveiled its new Optimus 3D smartphone, a device officials hope will boost smartphone sales by 40 percent in the second half of the year. The device runs Android and is powered by Texas Instruments mobile chips. It offers a 4.3-inch display, two cameras, and pre-loaded 3D games. LG hopes to sell 1.7 million Optimus 3D units this year, according to Reuters.

LG officials are hoping it will be a key part of a turnaround for the business as the year goes on. Along with the reduced smartphone forecast, overall handset sales projections also were lowered, from 150 million units to 114 million, due in large part to the trend away from feature phones and more toward smartphones. The company is also losing ground to rivals like Apple, with its iPhone, and Samsung, with its Galaxy S device.

“Our overall performance is gradually improving…but it’s difficult to give a precise prediction when our business will turn around due to a fast changing external market environment,” Park said, according to Reuters.

The LG executive said the company would add to its lineup in the second half of 2011 with new devices that will include 4G LTE (Long-Term Evolution) phones and smartphones with high-definition displays, Reuters reported.

LG currently ranks third in the world in mobile phone sales. In a May 19 report, market research firm Gartner had Nokia in the top spot in the first quarter, with 25.1 percent market share, followed by Samsung, with 16.1 percent and LG with 5.6 percent. Apple was fourth, with 3.9 percent.

LG’s market share had dropped from 7.6 percent from the same period last year.