LG numbers Q2 are also down

Quick posting from while on the road, or should I say while Up In The Air doing some George Clooney-ish travel... LG numbers came in at 14.1 million smartphones. This is down 8% from Q1. Their preliminary market share is an even 4.0% and they barely registered a profit in their handset business. This is strongly against my expectation that LG would be biggest winner when Samsung was faltering and that the G4 flagship would pick up easily customers who were disappointed in lost features in the Galaxy S6. Samsung did lose those customers but not to LG, they have apparently gone mostly to Huawei who also has taken customers from LG (and even from the iPhone) in the past 3 months. Also for those interested, LG shipped 4.8 million dumbphones in the quarter so their total handsets were 19.9 million and 4.7% of the total handset market. LG smartphone migration rate at 71%. Oh and to be clear, as LG profit was so thin, we know they've priced the LG smartphones 'to take up share' and that strategy has not worked. There will be interesting lessons from this quarter once we have all the pieces to the pie and can dig in particularly to why Huawei is surging so much. I did expect LG to have a blowout quarter and they clearly didn't.

Ok, wanted to post this, we'll do more as numbers come in and I try to learn to sleep to the sound of exotic birds of paradise keeping me awake at night outside the hotel window (gosh they are loud, that is what it must feel like for those who didn't grow up in a city, to first visit Manhattan and hear all the sirens of emergency vehicles every night haha, boy what a cacophony and its nothing like sunrise here yet... don't these birds have a smartwatch to keep time?)  :-)

Comments

[Marty]

Earplugs are an essential element in any traveler's ditty bag!

[RottenApple]

The age old problem: It's impossible to sell stuff if people can't buy it. LGs are quite hard to find in stores, as are Sonys.

[Maggan]

If the features are right (the g4 has a 16 mp camera, SD-card support and a swappable battery) and the price is right, then what is causing this? Are they having problems with manufacturing enough quantity or is their distribution model flawed?

With those features LG phones should be flying off the shelves.

[adi purbakala]

Tomi.

Perhaps the chinese strategy of low price 95% good qyality is working.

Do you think motorola with they new wallet friendly phone will make lenovo/motorola gain in q3/q4?

[Aaron]

I think that Samsung huge market share will continue to decline. Their market also wont be taken over by other big maker rather it will be divided by smaller Android OEMs. The next big Android OEM is going to be Asus. Asus with its Zenfone 2 phones have proven to be popular and will snatch market share from Samsung. Its also going to be bad news for Motorola as they will also get affected by the price war in Smartphones both in mid and lowend segments. Oneplus 2 is going to have a bigger share possibly at the expense of Motorola.

[adi purbakala]

@wayne

It is say many time here that apple not got more than 50% of premium or over 600.

@aaron

Ausus or motorola or oneplus. The real winer is the customer.

[Winter]

@Boron95
"This is a "biggest loser" or "least ugly" competition."

That is called a free market with competition that leads to optimal price forming. That is indeed a different universe from the Luxury market.

[RottenApple]

@Baron 95:

"The ASP of Samsung smartphones (post S6 released) DECLINED by more than 10% to BELOW $300. Meanwhile Apple's ASP increased by 20% to $662."

And you really think that such a disparity in ASP is sustainable for Apple? They are gradually moving out of competition and eventually this WILL show up in sales numbers.

I think the only thing that saves them for the time being is the inability of Android to quickly push security updates which certainly makes some users choose a product that can do this more efficiently. But my guess is that this problem will be solved eventually because it MUST be solved. This may be even more important than being bound to the 'ecosystem', because even for many iPhone owners this is of little to no consequence, they rarely use this stuff outside what is necessary to operate the phone.

[falito]

There is a lot of differentiation in Mexico kids wantan iphone so it's selling 4s and 5 & 5s and of course 5C, it's kind of "u got to hav one"... but even iphone 5 with 8gb of it cost 400 us dls. Just hours ago my friend made a new contract with NEXTEL (yes still in bussiness in MX) yesterday and get a new GENERATION moto G free... ??? and he pass to pay 120 dls to get a galaxy 5 ?? in a contract of 2 years..
And he just paid a dinner of 150 dls tonight.. What is this...??? WE DONT CARE ANYMORE FOR THE EXTRA STUFF.. only the tech guys buy the flagship ... and me

[falito]

counterpoint research blog, just issue that Samsung Tizen was the best selling smartphone in INDIA for the last qt... and last month was in Bangladesh ... what it'is... ??? Unless we have an iphone... we don't care about specs ...and of course a ZTE 5.5 inch screen that costs 250 dls out of contract (prepaid)..
Unless u have a complete system or forked OS (MI store + Ads $$) like apple, Android, Xiaomi (forked), Samsung Tizen (losing on every phone), Windows 10.. or Windows Phone whatever... IF U DONT OWN THE SYSTEM.. or Apps Renevue.. u are going to be gone...

[RottenApple]

@falito:

Just a few things:

" IF U DONT OWN THE SYSTEM"

No, you only got Apple as reference here but the rest of the market operates on different terms. Owning a system is worthless if nobody cares about it. Microsoft learned that the hard way, and Samsung is going to learn this as well.
What we have here is the classic case of destroying one's business because stupid executives do not unterstand why this strategy only works in the premium segment.

"or Apps Renevue.."

I don't think this is in any way important. Even for Apple this is peanuts compared to the profit made from hardware sales and is offset by massive costs to operate the app store. It's not that the 30% cut is pure profit.

[falito]

That-s why Cyanogen it getting a lot of buzz and financial support, and I ask someone of Tmmi's bloggers, what is the relation of Androids against forked.. (about 18 months was classcic (80-20%) I really don-t know and wanna know

[John F]

Another one bites the dust

From the BBC ....
Samsung used to be this huge industry giant, dominating the smartphone field. And now that giant seems to be tumbling under pressure from Apple in the top-segment and cheaper Chinese competitors," Bryan Ma, vice president of client devices research at technology consultants IDC, told the BBC.

He said the company could in theory compete with the cheaper Chinese rivals "but it would hurt their margins. And then, even with good sales, it would hurt their profit."

"When it comes to competing with the iPhone - Apple has an entire ecosystem around their devices which Samsung just doesn't have."

Let's see .... " in theory compete with the cheaper Chinese rivals "

In practise market share seems not to be working too well and it leads to disaster

[Winter]

@John F
"In practise market share seems not to be working too well and it leads to disaster"

Competition always leads to disaster.

Prices and profits drop until just the companies remain that can deliver the best goods at the lowest prices. Competition also forces companies to innovate and develop better products, increasing costs and pushing profits even further down.

In the end, the consumers are stuck with innovative and high quality products at low prices. All at the cost of the shareholders.

Competition should be outlawed.

[RottenApple]

@John F:

"When it comes to competing with the iPhone - Apple has an entire ecosystem around their devices which Samsung just doesn't have."

Wrong conclusion! But that's typical for American analysts who simply do not understand how the market in the rest of the world works.

But as it stands, prices will go down, and anyone with half a brain could predict that Samsung would be the first victim of this development.
And again the typical American analyst completely ignores that Apple is not immune from such developments. If prices go down - and they will if Samsung is eliminated from the picture - Apple will stand alone with hardware twice as expensive as the rest of the market. And that's simply not going to work out.

Samsung made the fatal mistake trying to fight the iPhone where it is strong while at the same time they stopped fighting Apple where they are WEAK. The end result: People stopped caring and went one price category lower where the offerings were 'just as good'. It's becoming abundantly clear that the current premium segment is vastly overspecced for the average consumer and not even Apple can hide from that fact. Sooner or later they need a mid-range 5'' device to remain relevant.

[Interesting]

How can you come to a conclusion that Huawei has Yalen customers from Apple??
Apple crowth was 33% when the ovella market crowth was 2%. Apple customers moved to Huawei only in somebodys dreams. Apple's crowth in China was 112%.

Correct that misinformation because the evidence from the real world tells totally a different story. >:(

[John F]

@Rotten
anyone with half a brain could predict that Samsung would be the first victim of this development.
Samsung made the fatal mistake trying to fight the iPhone where it is strong

Wow, now everyone saw it coming, I am 100% on record since I first participated in this blog telling that the race to the bottom bleeds companies to death, that market share is a loose loose strategy while ALL others who defended Samsung strategy called it pure genious
Apple haters here have been talking for a LONG time that Samsung will prevail and apple will fail, crazy Abdul even predicted like 2 years ago that apple will vanish in 2 quarters ... and that he would be ashamed of his own son if he would like apple products.
Go back a couple of years in time and find posts by yourself predicting Samsung's dilema please.

@Winter
Competition should be outlawed.

I don't agree with you .... but replicating Porsche, BMW, Mercedes, LV, Rolex, Apple etc should be mandatory -)

[RottenApple]

@Duke:

Nobody said that Samsung can be the only one selling premium. But the fact is, Samsung IS the only one selling premium Android in notable quantities. If Samsung goes, premium Android goes - and with it the direct competition on price for Apple.

Regarding LG, that's what Tomi predicted. I didn't say anything back then but I had my doubts from the start. LG is mostly a no-show when you go into an electronics store, it's hard to sell stuff that way. If people want LG they have to actively search for it and most customers simply do not do that.

@John F:

"Apple haters here have been talking for a LONG time that Samsung will prevail and apple will fail,"

That was before Samsung went crazy. But with two consecutive years of underwhelming premium releases even the most stable business will crumble. Plus, Samsung always had a big problem with their hated TouchWiz UI which they failed to acknowledge. That problem was offset by good hardware. Take away the good hardware and the hated UI will become an additional liability. And from the looks of it they haven't learned from their mistake and are about to repeat it again. In a market that is this competetive, such mistakes aren't forgiven.

To summarize: Samsung failed due to making serious mistakes. These are hard to predict, see Nokia's insane Windows Phone adventure. I, for example wouldn't have expected Samsumg to release such a feature-amputated iPhone wannabe as the S6 and to stick to that design disaster for upcoming releases (e.g. Note 5.)

But no matter, how this all goes, the end result for Apple will be to end up in the same niche as the Mac: A fringe platform just large enough that it cannot be completely ignored. How much market share they will have only depends on the price points they decide to serve.

[Maggan]

Samsung is in no trouble. They have the most market share, they still makes profits and any profit is enough, and they use Android which is dominant.

And they have had the most market share for very long now, so that should protect them long term.

All boxes ticked. Samsung is doing fine.

[Spawn]

@adi purbakala

> Perhaps the chinese strategy of low price 95% good qyality is working.

LG devices are more cheap then Huawei. Its not the price since I am sure Huawei's best selling devices are there mid-/higher segment devices. Go, buy one, they are just very good :-)

@winter

> In the end, the consumers are stuck with innovative and high quality products at low prices. All at the cost of the shareholders.
> Competition should be outlawed.

haha, YMMD :-)

@RottenApple

> Samsung made the fatal mistake trying to fight the iPhone where it is strong while at the same time they stopped fighting Apple where they are WEAK.

Competition increased while at tge same time Samsung decided to decrease the quality of there products introducing knox, region code problems, horrible communication strategies, removing most valuable features, etc. Classic top-down fail and unfortunately Samsung's size, cultural background, past success does prevent outside top-down correction. A turnaround can only happen from within the top-level management layer and I fear that means replacing top decision-makers is the only way to turn around. Probably not going to happen for some time to come.

Meanwhile I welcome our new Huawei overlords :-)