Life’s Good at LG: How the company could make a smartphone comeback

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Check out our full review of the LG Optimus G phone.

The news that LG is launching a new line of Android smartphones wasn’t a huge surprise, but the specifics definitely were. The new LG Optimus G looks like the most powerful Android smartphone on the horizon right now. The South Korean company also announced the Optimus L9, which looks like a nice update to the L-Series. That follows the reported success of the “phablet” (it’s a 5-inch phone and tablet crossover), the LG Optimus Vu in Korea, which is due to launch in the U.S. soon.

The exciting news extends beyond the hardware. Features like live zooming on video, the ability to stream content to your TV and simultaneously have something different on your phone’s screen, a voice activated camera, and an easy note system called QMemo all look promising. On the back of those announcements, LG Electronics stock rose 4.5 percent. Could LG step out from the shadow of its compatriot Samsung and grab a larger share of the smartphone market?

Changing focus

In the second quarter of 2012 mobile handset shipment charts, LG ranked number five with a 3.6 percent share. Shipments actually declined and the company posted a loss, which it attributed to the collapsing feature phone market and increased marketing expenses.

Going forward, LG’s focus appears to be on high-end 4G LTE smartphones. That means going up against Samsung, HTC, and Motorola on the Android platform, and there will be stiff competition from Apple’s new iPhone and possibly Nokia’s Windows Phone 8 line-up. Can LG compete in this space?

Big plans

There is no doubt that LG Chairman, Koo Bon-moo, is determined to push the company to greater heights. According to the Korea Times, he ordered the divisions of the LG group to “actively create synergy together to develop new products that will lead the market in the future.”

The first fruit of their labor was the new LG Optimus G, but that’s only the beginning. Spending on research and development has been increased, more mergers are being pursued, and the company is planning to focus greater effort on green innovations.

A pooling of knowledge by the various LG divisions – LG Electronics, LG Chem, LG Display, and LG Innotek – has real potential to produce quality devices. As Park Jong-seok, head of LG Electronics’ mobile division, optimistically suggested, “(The launch of the Optimus G) will give a certain momentum to our smartphone business and be an opportune turning point for LG to secure leadership in the world market.”

Digging deeper

This all sounds great, but can LG keep up with Samsung and Apple? In terms of research and development, estimates vary and the waters are muddied by the fact that most big tech companies are working on a range of products, not just mobile. Samsung is spending billions of dollars annually while Apple actually doesn’t spend that much. However, LG is certainly devoting enough resources to its mobile division to make a real difference. This Fierce Wireless article suggests a major refocus and investment on its smartphone business.

Does it need an image change?

LG is a well-known brand. This comScore report reveals that LG devices accounted for 19.4 percent of US mobile subscribers in February 2012 and that fell to a still impressive 19.1 percent by May 2012. The trouble is that the bulk of those devices were feature phones or smartphones in the budget or mid-range category and so LG may need to do some work to get people to see them in a new, premium light.

The fact that LG has always ranked well in consumer satisfaction surveys (generally above Samsung) bodes well for them. There’s also the fact that LG Display manufactures touchscreens for Apple’s iPhone and iPad range.

Is quality enough?

Benchmark tests of the new Qualcomm Snapdragon S4 Pro processors at AnandTech rank the chip that LG is using in its Optimus G way ahead of its Android rivals. In theory it should outperform current market leaders like the Samsung Galaxy S3. How many people are swayed by specs though? As we know from HTC’s decline, it’s not enough to have a top class product, you also need some marketing muscle and that’s where Samsung and Apple are ahead of the game.

Much will depend on the early reviews, the carriers, and the all-important pricing. There’s certainly room for LG to make a splash and capitalize on Samsung’s war with Apple and HTC’s rough patch.

Staying out of the patent war

LG signed a licensing deal with Microsoft back at the start of the year which covered its use of the Android platform and also the Chrome OS. While Apple has sued a number of Android manufacturers it seems to have steered clear of LG so far.

When it comes to patents, LG apparently has a decent portfolio, and it doesn’t shy away from litigation. There has been a patent battle with Sony in the past, but no fight with Apple. In fact, Woo-Young Kwak, head of LG Mobile’s Handset R&D Center, famously said at a press conference back in 2007, “We consider that Apple copied the Prada phone after the design was unveiled when it was presented in the iF Design Award and won the prize in September 2006.”

There was talk of LG suing Apple at the time, but it never happened. Evidence presented by Samsung at the trial included photos of the LG Prada. The LG Prada was definitely no iPhone, but it does make you wonder. In any case staying out of the current patent war could be good for LG.

Shooting for third

A hands-on with the Optimus G will help decide if the company’s prospects are truly rosy. Taking on Samsung and Apple at the premium end of the smartphone market may be beyond it, but there’s no reason LG can’t shoot for third. What do you think? Do you fancy LG’s chances?