On Monday, the South Korean tech giant announced that it would close down its mobile phone unit after years of losses, marking the end of an era for a trailblazer in the Android world.
The division is expected to be wound down by July 31, although the company may continue to sell some of its existing models after that, according to LG Electronics.
The “strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions,” the company said in a statement.
“LG leaves a ‘small vacuum’ of global market share of under 2%,” Neil Shah, a partner and vice president of research at Counterpoint Research, told CNN Business.
That space will likely be filled by Samsung in both South Korea and the United States, as well as some smaller players, he predicted.
LG had already warned about the fate of its phone business in January, saying that it was looking at all options, including a potential sale of the unit.
The decision to call it quits on Monday was met with an outpouring of nostalgia on social media, where users shared photos of their first LG phones and reminisced over the company’s willingness to innovate.
“They didn’t always ace every phone, but losing them means losing a competitor that was willing to try new things, even when they didn’t work,” Brownlee added.
LG said at the time that the device would launch sometime this year, though the company confirmed to CNN Business on Monday that it won’t now be released.
“For years, [the] LG smartphone was known for its unconventional and innovative features,” Shengtao Jin, a research analyst at Canalys, told CNN Business. “While these features helped LG differentiate itself from other mainstream brands, most consumers did not find much practical value in these features.”
But the firm won’t crash out of the industry entirely. “Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G,” it said in the statement.
“Core technologies developed during the two decades of LG’s mobile business operations will also be retained and applied to existing and future products.”
Experts believe that this decision may help the company in future. LG will enjoy better growth prospects overall once it does away with the mobile business, said Shah, who described the move as “removing the thorn” from the company’s “feet.”
“It would be wiser for LG to cut the loss and place the bet on areas that it has an advantage in, such as the display business,” Jin added.
LG Electronics’ stock closed down 2.5% in South Korea on Monday following the news.