Our preliminary analysis for the Q1 2014 handset and smartphone landscape was published last week and the Korean vendor LG remained the fourth largest handset supplier and fifth largest smartphone supplier during the quarter. We take a deeper dive into how LG performed during the quarter.

Overall Handsets & Smartphone Shipments:

  • In Q1 2014, LG shipped a slightly below expected 16.4 million handsets globally, a decrease 1.2% YoY
  • 3 out of 4 handsets shipped by LG during the quarter were smartphones, in other words, smartphones accounted for 75% of the total handset shipments up from 63% a year ago.
    • The Korean vendor shipped 12.3 million smartphones in the current quarter, an increase of 19% (YoY)
    • According to our latest Market Pulse Report, LG G2 was the best selling model (by revenue) followed by C 397 (a feature phone) and Nexus 5; the new LG G Pro2 is also on an upward trajectory but still not making it to our top-10 list

 Regional Trends:

  • CALA was the biggest market for LG in terms of handset volumes which grew 10% over the year; mainly attributed to the increase in smartphones sales, although offset by swiftly declining feature phone shipments
  • LG’s biggest region in terms of revenues, North America saw handset shipments decline 20% YoY due to huge decline (-63% YoY) in feature phone demand not offset by a positive growth in smartphones segment
  • Although Middle East and Africa is a very small market for LG, unlike Americas LG’s feature phones shipments grew 113% compared to last year

Exhibit 1: LG: Shipments Growth

LG Q1 2014 Performance

 Technology Trends:

  • Share of WCDMA handsets increased to 45%, accounting for the maximum share in the total shipments; thus decreasing the demand or volume of CDMA and GSM handsets in the market
    • CALA accounted for half of the WCDMA sales in the quarter
  • LG’s LTE shipments growth was the bright spot for vendor as it more than doubled compared to Q1 2013
    • This was mainly due to healthy demand for models such as LG G2 and LG Nexus 5
    • Americas region accounted for 3 out of 5 global LTE shipments during the Q1 2014 quarter
    • LTE smartphones are not 40% of the total smartphones shipped during the quarter

Recommendations:

  • LG should look forward to broaden their portfolio with more LTE models not only in premium segments but also in mid-tier to capture the next LTE growth wave coming across the prepaid markets of Europe and China
    • The upcoming LG G3 should strengthen their premium-tier offering and LG G2 / G2 Pro will move down the high-tiers. However, L series of handsets should be rejuvenated with LTE capabilities
  • Furthermore, we caution LG to stay leaner and not get into price wars and balance marketing budgets during the Q2 2014 to influx more marketing muscle for the flagship LG G3 launch in Q3 2014

 

About Author

Peter has 23 years experience in the mobile industry with extensive experience in market analysis and corporate development. Most recently Peter was Global Head of Market and Competitive Intelligence at Nokia. Here he headed a team responsible for analyzing and quantifying the industry.Prior to Nokia, Peter was an equity analyst at SoundView Technology Group. And before that he was VP and Chief Analyst of mobile and wireless research at Gartner. Peter’s early years in the industry were spent with NEC and Panasonic.