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LG Fails To Excite Smartphone Buyers

LG's handsets haven't gained traction in the competitive smartphone market, forcing the company to drastically reduce sales targets for the year.
The LG G2x is one of the best Android devices I've used in the last six months. It offers a great blend of styling, power, and features at an affordable price on a speedy data network. Despite a glowing review I wrote of the G2x, it appears that few people are buying it and LG's other smartphones, as the company recently sounded the financial alarm bells.

The company warned that its smartphones just aren't selling as originally hoped. In response to the lax demand, LG reduced its smartphone sales forecasts from 30 million sold in 2011 down to 24 million--a reduction of 20%. It reduced sales targets for its entire handset division from 150 million down to 114 million--a reduction of 24%.

LG is the world's third-largest handset maker by volume, but its smartphone business has been stalled for several years now. The company isn't sure when its smartphone business will improve.

On Thursday, Park Jong-seok, head of LG's handset division, told reporters, "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."

By way of comparison, Samsung, LG's home-market competitor, has responded with amazing dexterity to the quick-paced smartphone market. While LG says it sold about 10 million smartphones during the first half of 2011, Samsung sold 19 million in the second quarter alone. Samsung is expected to clear 60 million smartphone sales this year, based on the strong performance of its Galaxy line of devices.

In its most recent quarterly report, Apple said it sold 18.65 million iPhones. That puts Apple on track to sell about 70 million iPhones over the course of the next year.

It doesn't help that demand for LG's low- and mid-range handsets has slackened, too.

LG is expected to notch a fifth consecutive quarterly loss in its next report, which reflects the sad state of its smartphone sales. Samsung--and Motorola and HTC, to a lesser extent--have beaten LG to the smartphone punch, churning out more appealing models faster than it can. Samsung, Motorola, and HTC have also received a lot of marketing support from the wireless network operators for their Android devices. Samsung, Motorola, and HTC commercials are on TV all the time. I can't recall the last time I saw an LG smartphone commercial.

LG isn't the only company struggling in the smartphone space. We know about Nokia's poor fortunes all too well. RIM, too, has seen a drop in the number of smartphone sales. The common thread tying these three companies is their ability--or lack thereof--to respond quickly to changing market conditions.

LG has come close to success, but needs kick out a killer device that sells tens of millions of units if it wants to stay in the smartphone race.

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