Google's new favorite OEM: The LG story

LG Electronics is a major player in the global consumer electronics market and it is fast-becoming one of the top Android OEMs. Recent smartphone models from the South Korean company have been truly impressive and, coupled with Google’s faith in LG as a Nexus handset partner, it is successfully making the transition from being known for budget and mid-range devices to being at the cutting edge of mobile technology.

Towards the end of 2011, LG began to refocus research and development on the smartphone market and Chairman Koo Bon-moo demanded greater collaboration between divisions to produce market leading smartphones. The results could clearly be seen when LG announced the Optimus G towards the end of the summer in 2012, closely followed by the Nexus 4. One year later and the company repeated the trick with the LG G2 and the Nexus 5. It is now perhaps best placed of all the Android OEMs to tackle the might of Samsung.

Lucky Goldstar

You can trace the roots of LG back to the 1947 formation of the Lak-Hui Chemical Industrial Corporation which would go on to become LG Chem. Founder, Koo In-Hwoi wanted to imbue the company with a pioneering spirit, and he focused on fostering harmony, and committed resources to research and development. GoldStar, which was to become LG Electronics, wasn’t created until 1958.

Goldstar produced Korea’s first radio, choosing to try and develop the majority of the components itself instead of importing them. This was a principle that would serve the company well in future. It went on to produce TVs, refrigerators, washing machines, and air conditioners for the domestic market, but the ambition was to expand exports, and by 1962 it had begun to ship radios to the U.S.

Lak-Hui (Lucky) and Goldstar were merged to form Lucky-Goldstar, the original LG, but consumer electronics were sold under the Goldstar name, while the Lucky brand was known in Korea for toothpaste and other household products. The company established its first overseas subsidiary in 1982 in Huntsville, Alabama and sold color televisions with a “Made in USA” seal. It went global soon after, adding outposts in Europe, Central and South America, and across Asia.

Dark times and rebirth

Towards the end of the eighties internal squabbles between the labor and management led to a downturn in LG’s fortunes. Competition in the electronics market grew fierce in the early nineties as more trade restrictions emerged and there was a realization that LG needed to update. In 1995, the company was officially renamed LG and the acronym was given a new meaning, Life’s Good, which it was hoped would appeal to the Western market.

LG is a hit

Research and development enabled LG to score a few firsts in the market. The first 60-inch plasma TV in 1998 and the first Internet connected appliances in 2000. By 2004 LG was shooting for a top three spot in consumer electronics. Part of this success was driven by its mobile devices. It was exporting mobile phones to Russia, Italy, Indonesia, and it established market leadership in Australia in 2001. Europe and the Middle East followed in 2003, and, by 2005, LG was the fourth largest manufacturer of mobile handsets worldwide.

LG was doing well in the feature phone market, but the first really sweet taste of success in mobile came from the LG Chocolate. It was a smash-hit feature phone with MP3 capability and a slider design, and LG would go on to sell 7.5 million of them worldwide in 2006.

The first capacitive touchscreen

Fast-developing a reputation for style, LG’s partnership with Prada shouldn’t have been a major surprise, but its first release would certainly prove controversial. The LG Prada was the world’s first mobile phone with a capacitive touchscreen. It was a 3-inch touchscreen with a resolution of 240 x 400 pixels. While it turned a lot of heads, the LG Prada was essentially still a feature phone, and an expensive one at that. It had MP3 support and a 2MP camera, but there was no Android back then. The LG Prada was impressive enough that it sold over 1 million units in 18 months, but it would go down in history for another reason.

The LG Prada pre-dated the original iPhone. In fact at the beginning of 2007 it looked as though a lawsuit was certain. LG’s head of the Mobile Handset R&D Center said “We consider that Apple copied the Prada phone after the design was unveiled when it was presented in the iF Design Award and won the prize in September 2006.”

Samsung would later make the same claim in its unsuccessful trial with Apple, but LG and Apple never went to court over it. This could be down to LG’s many supply contracts with Apple, or perhaps another deal was struck behind the scenes. You may think the company prefers to avoid the courtroom after settling with Microsoft over Android, but LG’s rivalry with Samsung is fierce and has provoked a number of lawsuits on either side. LG has also sued Sony and others in the past.

Android adoption

LG’s first Android smartphone was the GW620 (also known as the Eve and the InTouch Max). It landed at the end of 2009 running Cupcake, though it was later updated to Froyo. It was a budget device with a 3.2-inch screen that slid aside to reveal a full QWERTY keyboard. The clunky UI, resistive screen, and dated version of Android at launch sank it, and it never got a U.S. release.

The first Android from LG to land in the States was the Ally in 2010. You can check out our LG Ally review to refresh your memory. It was a decent device running Android 2.1 and, though it retained a physical keyboard, it featured a few important improvements over the GW260. The LG Ally was still pitched as a mid-range, affordable device.

Changing strategy

As the third largest mobile handset manufacturer worldwide in 2009, LG was obviously doing something right, but that statistic is not as meaningful as you might imagine because it included feature phones and Nokia was still number one. What LG had to do was stake a claim for the smartphone market.

The LG Optimus 2X, announced at the end of 2010, was the first smartphone with a dual-core processor, the first Tegra 2 1GHz CPU. It also had a 4-inch 480 x 800 pixel display, an 8MP camera, and ran Android 2.2 out of the gate. The impressive hardware was let down by the software, and important rivals, most notably the Samsung Galaxy S2, soon blew it out of the water on both counts.

As the feature phone market collapsed, LG was struggling to make the transition to smartphone success. It had worked wonders in the past by undercutting the competition, but the budget road didn’t seem to be cutting it anymore. As it became clear, that mobile technology would be vital for the future of the company, LG began to shift more resources into smartphone R&D, which would form its focus by the end of 2011.

Chairman Koo Non-moo demanded that the company pulled together and so LG Chem, LG Display and LG Innotek would contribute more to LG Electronics to make really cutting edge smartphones.

Becoming Google’s favorite

The LG Optimus G was an important smartphone for LG. The reviews were good, it was clearly the best phone the company had produced to date, and it was a worthy Android flagship to compete with the best that Samsung, HTC, or Sony could muster. It signaled LG’s new position on the cutting edge and helped to wash away the perception that the company was a budget to mid-range workhorse.

This transformation in perception was accelerated by Google choosing LG to produce the Nexus 4. It combined impressive specs and a premium build with very competitive pricing and the reviews were good. The big problem for the Nexus 4 was LG’s struggle to meet demand.

Why did Google choose LG? We can assume that the South Korean manufacturer gave Mountain View a sneak peek at what was in the pipeline and the execs liked what they saw. We can also imagine that Google sees the OEMs as spinning plates, and it was time to give LG a turn. HTCalready had a shot, Samsung may be getting too big for its boots, and Motorola is owned by Google, so it will go to lengths to avoid cries of favoritism.

A very big year

At the start of 2013 LG snagged second spot in the U.S. handset market. Once again that includes feature phones, but it still shows that LG is making progress. In the middle of 2013 IDC put LG in second place behind Samsung in the Android smartphone vendor chart. It was a distant second, at 6.5% compared to Samsung’s 39.1%, but it was a significant gain for LG over the previous year. By the third quarter of 2013 a Gartner report put LG in fourth place in the worldwide smartphone chart on 4.8% behind Samsung, Apple, and Lenovo.

The flagship LG G2 landed in September and was generally well-received as another worthy competitor at the top-end of the Android market. Google also stuck with LG for the Nexus 5 and, while it’s certainly no slouch, the major temptation of the Nexus 5 is the amazingly low price tag. Interestingly, it also marked a new strategy for Google as the Experience Launcher and several Android 4.4 KitKat features are currently exclusive to the Nexus 5.

We’ll find out just how much of an impact the G2 and Nexus 5 have made when we see the fourth quarter results at the end of the month.

The future for LG

Things look pretty bright for LG right now, but it remains to be seen if the company can close the gap on its biggest rival, Samsung. We think the LG G Flex has scored a win over Samsung’s Round as flexible display technology makes a debut appearance, but it’s very early days. LG just made a move into wearables at CES, which is sure to be another major battleground in 2014.

Fears that LG might be looking to move away from Android with its webOS purchase have not entirely been put to bed, as the company revealed its new line of smart TVs in Vegas as well. We’re sure Google would rather they were running Android.

Will LG get another shot at a Nexus or is Sony up next? We think MWC might be the venue for LG to announce a few new smartphones, maybe a smartwatch, and possibly even the new Nexus 10. Could 2014 be an even better year?