LG readies for smartphone battle in India

When Gartner recently published its report on the worldwide market for smartphones in the third quarter (July-September) of 2013, it came to light that Lenovo of China, with a share of 5.1 per cent, had overtaken LG Electronics (4.8 per cent) to become the third largest player after Samsung (32.1 per cent) and Apple (12.1 per cent). Moreover, Huawei, another Chinese powerhouse, was found snapping at LG's heels with a market share of 4.7 per cent. The heat is on the Korean company. It has started telling on its financials. In October, while announcing the third-quarter results, LG said its mobile handset business (which included 12 million smartphones) had lost $75.5 million on account of high marketing costs.

For LG, the situation in India, the final frontier for all mobile handset makers, is worse. With just 2 per cent share of the smartphone market in 2012, it is ranked low in the sweepstakes, way below arch rival, fellow chaebol and leader Samsung (50 per cent, including phablets). It is, at best, a fringe player in this business. After a decade of dominance in the consumer electronics space, LG some years ago lost the top slot to Samsung. Now, in the sunrise business of mobile handsets, it has fallen way behind. If LG wants to become big in the global smartphone business, India is where the fight-back has to start. The country hopes to sell 50 million smartphones in 2014. But buyers here are price-sensitive, and the market is already overcrowded. At the top end are high-technology brands like Apple and Samsung and at the bottom are local price warriors like Micromax and Karbonn. In between are well-respected Nokia and Sony Ericsson. It won't be easy for LG, or for any other new entrant, to gain a foothold.

On a new road
As a part of its plan to globally reset its mobile phone business, with a focus on the smartphone portfolio, in July this year LG India announced a new road map. It has earmarked almost Rs 80 crore to refresh its distribution network as well as its product portfolio and devise a new marketing and branding pitch. It wants to launch 25-odd devices across various price points, from Rs 6,500 to Rs 43,000. Interestingly, around 70 per cent of these handsets would in the Rs 10,000-15,000 category - the sweet spot for overseas brands. Google's Nexus 4 (LG is a global partner of Google for the Nexus range of handsets) and the top-end G2 range of smartphones would be the drivers of the smartphone portfolio. Next year, LG plans to flood the market with 30 new handsets.

LG has reworked its distribution strategy. Thus, it will focus on 35 cities, which account for 70 per cent of the addressable market for smartphones in the country. Till 2012, the company had a presence in over 100 cities, selling a mix of feature phones and smartphones. However, it plans to leverage its 700-odd service centres across the country - an offshoot of its consumer electronics business - to offer customer services. To improve customer interface, LG's plan is to have mobile experience zones in each of its dedicated brand stores. There are around 500 such stores across the country. Currently, around 40 per cent of them have mobile experience zones. The company is also looking to use the digital media extensively to connect with the consumer.

At the back end, LG has stepped up its localisation drive by shoring up the headcount at its laboratory in Bangalore. In the last two years, the number of engineers in the lab has gone up from 400 to 700. Company executives say this will help expedite the software and network optimisation processes, helping the company to shorten the launch time for India. Until around 2012, it took two to three months for any global model to come to the Indian market. The plan is to cut that time down to less than a month, says Amit Gujral, the marketing head of LG Mobile


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