LG, formerly one of the stars of the smartphone world, has taken to outsourcing the design and production of its lower-end and mid-range smartphones. The South Korean company previously outsourced some of its handsets but has opted to increase the number of phones that will be created at arm’s length.
Outsourcing your inventory
The reasoning behind the move? LG’s reorganisation will, hopefully, let the company compete with the Chinese companies churning out smartphones while cutting internal costs. Outsourcing its budget lineup means that other companies will design and manufacture smartphones and LG will just put its branding on them.
The company’s created a new division for so-called original design manufacture (ODM), which will handle external companies creating LG-branded smartphone tech. That’s according to an LG company spokeswoman.
History lesson
Which might be a smart move on LG’s part, as its smartphone sector is struggling. It has just posted its 22nd consecutive quarterly loss, and it hasn’t managed to crack the top seven smartphone maker’s ranking this year. That’s a little upsetting, if you know the company’s history.
LG was one of the best-known smartphone manufacturers a few years ago, right up until the company seemed to lose its way amid fierce competition from South Korean rival Samsung and from the Apple juggernaut. It was the modular LG G5 where the company lost its balance, and it’s battled to regain its footing since.
More recent efforts, like LG’s Wing, are interesting on a technical level but they’re not incredibly practical. Still, LG may be looking to exploit its current market position to get experimental. After all, they can only really go up. The outsourcing of its cheaper devices frees up budgets and staff for its premium products. Whether this approach pays off remains to be seen but the executives at LG HQ are obviously hoping to pull off something with the move.
Source: Reuters