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LG Cuts Prices Of Its Premium Smartphones In South Korea

September 17, 2015 - Written By Kishalaya Kundu

According to a report coming out of South Korea this Thursday, the country’s second largest smartphone maker LG Electronics, is struggling to move its smartphones off of the store shelves, resulting in the Q2, 2015 operating profits of its mobile communications business being wiped away almost entirely. LG’s smartphone making unit is a part of the company’s mobile communications business, the profits of which fell by as much as 99.7 percent on a YoY basis to 200 million won ($171,000), on revenues of 3.6 trillion won ($3.08 billion). While the company’s overall smartphone shipments fell by 3 percent during the quarter to 14.1 million units, its LTE-enabled phones reportedly saw a rise in demand, resulting in shipments of over 8 million such handsets during the quarter.

The company’s struggle in the overall smartphone sector however, reflected on its overall earnings as well. During the second quarter, the overall sales of LG Electronics slid by 7.6 percent YoY to 13.9 trillion won ($11.9 billion), while its operating profit came down by 60 percent on a year-on-year basis, to 244 billion won ($209 million). All this has meant that the South Korean consumer electronics company is desperate to get rid of its inventories, resulting in forced price cuts. According to the country’s leading wireless carrier SK Telecom, the average selling price of the 17 LG smartphones currently in the market is as low as 175,341 won ($150), while its domestic rival Samsung Electronics manages to get as much as 414,357 won ($355) from each customer on an average. Apple’s iPhones of course, come for a pretty penny, with average prices hovering around the 858,533 won ($735) mark. All these prices are applicable to customers who subscribe to SK Telecom’s 60,000 won ($51) monthly plans.

LG had been hoping to achieve better sales with its current generation G4 than it was able to achieve with its G3 last year. The company however, has struggled to hold its own against home-grown rival Samsung and American tech giant Apple at the premium end of the market, and Chinese brands at the mid-range segment globally. With the company believed to launch yet another flagship later this year (supposedly named the G4 Pro or G4 Note), it will be interesting to see whether that particular device can lift the company’s sagging sales and profits.