LG Shifts Strategy, Will No Longer Release Yearly Handset Updates
For years now, the phone industry has pursued a strategy of pushing regular yearly updates to device families. While this keeps new phones in the hands of the upgrade-obsessed, it doesn’t align particularly well with how people upgrade devices. In the old contract world, most people bought every two years, and 18-24 months still seems to be typical for many people. LG has announced that its stepping away from the yearly update cycle to focus more on updating when updates are called for.
“We will unveil new smartphones when it is needed. But we will not launch it just because other rivals do,” said LG Electronics Vice Chairman Cho Sung-jin on Wednesday during a press conference at the Consumer Electronics Show in Las Vegas, according to the Korea Herald.
“We plan to retain existing models longer by, for instance, unveiling more variant models of the G series or V series,” Cho said.
When pushed to give additional color on his answer, Cho responded by saying: “We found it is important to retain a good platform for a long (time) and concerns rise over the supply of lithium materials.”
That last line is a head-scratcher. The only lithium used in smartphone construction, to the best of our knowledge, is in the battery. Every smartphone has a battery, and although midrange phones might have smaller batteries than large phones, that’s just not much of a reduction in lithium usage.
The rest of the report is putting a brave face on a bad situation. LG’s smartphone division has been losing money for 11 quarters. It’s dragging down the company’s overall performance, and while the mobile division has made some progress in stemming the tide of red ink, it’s still not been enough to push the division back into the black.
On paper, slashing yearly phone development cycles makes a lot of sense. Carriers have to do a lot of their own testing before approving a device, which means there’s a team of people at LG, Samsung, and Apple who are more-or-less in sprint mode from Day 1. By the time a flagship launches, you’ve got to have its successor already well into development. Launching fewer platforms with more variants may also reduce the need to test devices for OS upgrades.
LG’s biggest enemy here isn’t going to be Apple or Samsung, but consumer expectations. People expect to see refreshed handsets every 12 months. Phone stores do as well. Not delivering those updates is going to make LG look bad, even if the company has made a smart financial move and put more time into improving its flagship designs. There’s no objective reason it should harm the company given typical replacement cycles for smartphones, but perception and reality often have a tenuous relationship with one another.
Given that Samsung and Apple (mostly Apple) capture virtually all (or all) the profit in the mobile ecosystem, it’s not clear why LG hasn’t thrown in the towel already.
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