Following a third straight quarterly operating loss in its mobile division, LG’s CEO Cho Juno sent an email out to employees informing them that the company needs “to change the way we work to move faster and lighter”.
In practice, this means moving people out of its mobile division, and on to other divisions where the company has been more successful. The news comes via The Korea Herald, and comes as no surprise.
Over the past few years, we’ve seen a huge rise in the number of competitive smartphones priced well under what traditional big-name smartphones cost. Companies like Xiaomi, Oppo, OnePlus and Huawei‘s sub-brand, Honor, have made a name for themselves by following this strategy. As you’d expect, this has a detrimental effect on companies like HTC, Sony and LG who all have huge teams and have been forced to make cuts in response.
While it’s easy to assume that the reshuffle is clearly a response to the current market situation, LG downplayed the move, saying that this is just part of the company’s regular annual reshuffle. We’re inclined to take that response with a pinch of salt.
Of course, we can’t blame the company for focussing its efforts on the divisions which are currently proving more successful. In its recent earnings report, it was clear that the mobile division was one of the least successful in the company’s portfolio. What’s more, it’s not the only major manufacturer to streamline its smartphone efforts. Virtually all of the big-name companies have done so in the past 12-18 months.
Still, things aren’t looking entirely gloomy for LG’s phone business. The Korean manufacturer is expecting to sell 3 million G5 units over the course of next quarter, bringing its mobile division to break even point.