April 11, 2021

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LG once out-iPhoned the iPhone. Now it’s exiting the phone business completely – CNET

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In January 2007, a consumer electronics giant announced the world’s first full touchscreen phone. Critics showered it with praise for its bold and sleek design. It launched a few months later and became a big hit. But this wasn’t Apple. LG Electronics pioneered this breakthrough, collaborating with luxury brand Prada on a phone with a capacitive touchscreen — the type found on all modern smartphones — that hit the market just before the original iPhone. 

The Prada Phone garnered accolades before the iPhone was even a thing, with an early design mockup winning an iF Product Design Award in 2006 in Germany. But that didn’t matter. When Steve Jobs took the stage — also in January 2007 — at Apple’s then-annual Macworld conference with the iPhone in hand, he changed the world

The LG Prada Phone beat out the iPhone as the first capacitive touchscreen handset.

CNET

The $777 Prada Phone, which sold more than a million units and birthed two sequels, has been relegated to the dustbin of obscure cellphone trivia.

“I was a little bit upset with Steve Jobs,” said Ramchan Woo, an LG executive who ushered in flagship phones like the LG G4 and G5, in a 2016 interview where he shared his thoughts about Jobs’ original presentation. Jobs had wowed the world with the iPhone, and no one was giving LG its due. 

There’s myriad reasons why the iPhone persists and the Prada didn’t. But that intersection in time and the wildly divergent routes taken by the two companies illustrate the struggles and uneven ride that marked LG’s foray into the phone business. The South Korean tech conglomerate, which accounts for nearly 4% of that nation’s economy, on Sunday night said it will shut down its mobile business in July, even as it was on the verge of releasing one of its most exciting phones ever in the LG Rollable

The ignominious end to LG’s phone business is fitting considering its two decades as a handset maker that continuously tried — and failed — to reach that upper strata of cellphone players. The company never fully capitalized on the household name recognition built on a family of products that includes televisions, laptops, washing machines and kitchen appliances. Furthermore, it was beset by an inferiority complex to crosstown rival Samsung.

Instead, LG’s history with phones ping-pongs between dealing with existential threats and eking out moderate hits just successful enough to keep it in the game as a second-tier player. It shares a similar story to Motorola and Nokia, feature phone stalwarts that were swallowed up by the disruptions brought on by the smartphone. While LG never enjoyed their heights of success, it did manage to survive longer. 

That’s no longer the case, with the phone business about to be shuttered. The following is the twist-filled tale of perennial second fiddle LG. 

Dominance in feature phones

Smartphones today employ a single, simple design — a glass display encased in a rectangular slab made of plastic, glass or aluminum. Looking for a little variety? Go spend $2,000 on a foldable Galaxy Z Fold 2

The phone market in the early to mid-2000s was wilder, with flip phones, sliders, candy bar phones and even lipstick-shaped phones. Heck, there were candy bars that turned into flip phones. From a design perspective, it was glorious — even if all you could do was send a text message and make a phone call. Particularly robust phones could play Mp3s. 

LG thrived in this environment after entering in 2002. And while the company was never a world-beater like Nokia or Motorola, steadily holding a single-digit slice of the global market for its first six years, it picked up steam in key markets like the US. It was here that it boasted a strong double-digit share of the business thanks to relationships with carriers like Verizon Wireless and Sprint. 

LG enjoyed success with standout phones like the slide-out Shine and a myriad of flip phones featuring generic alphanumeric code names. Then in 2004, Motorola introduced the blockbuster Razr, quickly setting the standard on ultra-thin clamshells and threatening to kill any momentum built up by LG. 

The following year, LG had a response. It had spent a year working on a music phone (it was literally dubbed “music phone” during its development) when Chang Ma, then-head of mobile product and marketing, fixated on a catchier name for the candy bar-shaped handset. 

The LG Chocolate revived the company’s phone efforts in the “dumb phone” days.

CNET

The LG Chocolate was born. 

“It looked great, it’s different and I just had to grab it and have it,” Ma said of his first impression of the prototype in an interview conducted in 2015 when he ran the US business, noting the playful name was an easier sell than listing out technical specs like speaker fidelity and file capacity. 

LG executives credit the Chocolate for helping keep the Razr momentum at bay and sustaining its growth during those early years, and at least one CNET editor still looks upon this classic dumb phone with nostalgic bliss

As the decade went on, LG found further success with so-called “quick-messaging devices,” which featured full keyboards for easier texting, a sort of precursor to smartphones. Hong-Joo Kim, another LG executive who previously worked on the mobile team, called that stretch “the glory years” for its feature phones. 

Unbeknownst to LG, those glory years were about to end. 

Behind from the start

It was 2009, and smartphones were still a luxurious novelty despite the appearance of the iPhone and Google’s first Android phone, the G1 from HTC. LG still moved millions of feature phones at each of the US carriers and didn’t deem Apple a threat because it was tied to AT&T as an exclusive. Android was even more of a niche thing. LG’s feature phone business, meanwhile, had peaked at a tenth of the world’s market for phones, according to Statista

“Ironically, 2009 was the best year for revenue and profit for mobile,” Kim said.

Publicly, the company expressed confidence, but privately, executives knew they were behind. That year, its heavy hitter was the enV Touch, a large (for its time) candy bar phone with a 3-inch touchscreen that unfolded to reveal a full QWERTY keyboard, dual speakers and a smaller inner screen. Verizon pumped it up as a potential rival to the iPhone with its basic games and rudimentary web browser. 

It was not. And LG knew it. 

“Some of us thought we were too happy with the success of the feature phone,” Kim said. “We were so late preparing for smartphones.”

The difference would be starkly felt just a few months later when Verizon shifted gears to its next flagship, the Motorola Droid, which debuted in October 2009. The Droid launched with the backing of a massive $100 million marketing campaign and a partnership between Motorola, Verizon and Google, and was credited with pushing Android phones into the mainstream. 

Other players like Samsung and HTC were piling on with Android phones of their own, but LG hesitated. 

“There was no ‘fire under my butt’ mentality,” said a former executive at LG’s US unit who didn’t want to be named. 

It wasn’t until August of the following year that LG put its foot to the pedal, promising a blitz of 10 Android smartphones and a tablet under the “Optimus” brand to close out 2010. 

By that time, the iPhone had shed its exclusivity deal with AT&T and expanded to Verizon. Samsung, meanwhile, had embarked on its own mission to take control of the smartphone market with the launch of its Galaxy S franchise and a massive marketing blitz comparable to the Verizon Droid campaign. 

LG, perennially in Samsung’s shadow, lacked the same marketing firepower despite a flood of products. Many of LG’s earliest Android attempts were budget-friendly options that didn’t stand out from the growing pack of entrants. 

“We failed to capture the mind share of users,” Kim said. 

Birth of a G

LG Electronics is structured much like Samsung: It’s part of a larger family of businesses under a single owner, known in Korea as a chaebol. The LG conglomerate’s various businesses specialize in display, camera tech and chemicals. 

These different units contributed the expertise and components that helped breathe life into LG’s smartphone aspirations. By 2012, LG was back in the game with the high-end Optimus G, which benefited from improved display, battery and camera. It was a hit both critically and commercially, selling more than 1 million units within its first four months. CNET editor Lynn La at the time called it “undoubtedly the best phone LG has ever offered.”

The LG Nexus still holds a warm place in the hearts of old-school Android fans. 

Josh Miller/CNET

The Optimus G was just the first of a potent one-two punch that year. LG’s development work on that device led to the introduction of Google’s Nexus 4 phone, which also drew critical praise for its ability to pack in high-quality components at what CNET editor Andrew Hoyle called a “bargain-basement price.” Even today, Android fans look back fondly at the Nexus 4. 

LG had averted another crisis. 

The following years would cement its flagship status with the successful follow-up to the Optimus G, the G2, as well as the more experimental LG G Flex, one of the first phones to feature a curved display and a back with a self-healing polymer and the product of a five-year development cycle

“They’ve come back very strong,” Jeff Bradley, then-senior vice president of devices at AT&T, said in a 2014 interview about LG. “We were emotionally excited about it when we first saw the G Flex.”

(AT&T said on Monday that it plans to continue supporting LG devices on its networks as the company makes its transition.)

But even with sales that exceeded expectations, LG struggled to market the devices and even communicate a clear identity. For instance, executives couldn’t agree on what the “G” actually stood for. Great? Good, as in its tagline, “Life’s Good”?

The LG G Flex 2 was an early precursor to the foldable phones we see today. 

Josh Miller/CNET

LG, unwilling to spend a lot on marketing, also tied itself to exclusives with carriers. That contrasted with Samsung’s strategy of making its Galaxy S phones available virtually everywhere, putting the emphasis on its brand over partners like Verizon or AT&T. LG, too dependent on carrier support, couldn’t establish its own relationship with consumers. 

“It was easier to appeal to the carriers so we could secure the better lock-in status,” Ma said. “I don’t have any regrets on the strategy at the time, because that was the only thing that we could do. But there was a little bit of a backfire.”

Ironically, it was only when LG started to take more risks with its G franchise that it really started to feel the burn. 

A bold step backfires

Tech enthusiasts often bemoan the lack of major innovations in the phone industry. We complain that each new iteration of a flagship phone lacks major game-changing features, and that the year-over-year improvements are incremental. 

Then someone actually takes a risk. 

After LG’s G4 faced criticism for a lack of new features beyond custom backing with materials like leather, the company took the bold step of introducing a modular customization system the following year with the G5. This came at a time when the modular concept was catching on through Google experimenting with initiatives like Project Ara

It was 2016, and LG held its launch event at the Sant Jordi Club sporting arena in Barcelona during the Mobile World Congress trade show. The company had scheduled its event to run in the afternoon, a few hours before Samsung’s own Unpacked event that evening. 

Armed with something different, LG hoped to snatch the spotlight away from its rival. “We don’t see excitement anymore,” Juno Cho, then-president of LG’s mobile business, said during the launch event, setting up the G5 as the antidote to “phone fatigue” that had set in with fewer breakthroughs on new devices.

And to be fair, the Galaxy S7 didn’t blow anyone away with dramatic changes. But perennially a master of presentation, Samsung’s Unpacked event featured a secret guest in Mark Zuckerberg, who memorably walked through a crowd filled with attendees wearing VR headsets before making his surprise appearance on stage. (In hindsight, there’s something unsettling about Zuckerberg walking among us as we sat there unaware.)

Samsung had won this showdown.  

Samsung’s Galaxy S7 Edge held more sway than the LG G5, despite the unique modular feature. 

Sarah Tew/CNET

It also didn’t help that the G5 modular system was a clunky setup that required you to power your phone down before swapping out parts like a camera grip or extra battery. LG promised a universe of accessories, dubbed “Friends,” that could be incorporated into the G5, but few materialized. Woo excitedly said in an interview that he hoped LG would get credit for changing how you use a phone. 

Critics, however, immediately jumped on it. 

“The LG G5 looks great on its own, and it’s going to have to sell that way — consumers don’t buy modular products,” consumer tech analyst Avi Greengart, now with Techsponential, tweeted at the time. 

They also didn’t buy the G5, which marked a huge blow to LG’s fortunes and any attempt to experiment. 

The last (rollable) gasp

Smarting from the ambitious bet on a buzzy concept that backfired, LG reverted to a “standard” flagship phone with the G6, complete with metal frame, improved cameras and top-of-the line processor. 

It was wholly forgettable. 

The G series would run for another two years, which would see the artificial intelligence-themed “ThinQ” name tacked on to the end to little effect. It  would ultimately see its end with the G8 in 2019. LG replaced it with the Velvet in 2020, while the V60 ThinQ 5G continued its V series run as its high-end device that also served as an affordable alternative to Samsung. 

For a stretch, it felt like LG was going through the motions, still unable to compete with the varsity players. 

The LG Wing is a weird phone, but it speaks to the company trying something different again. 

Angela Lang/CNET

But something happened in the fall: LG got the urge to experiment again. It introduced the Wing, a phone with two displays, one stacked on the other, with the upper display able to swivel to horizontal mode, forming a T shape. It was weird and strange, harking back to the more adventurous feature phone days. CNET’s La said that “the design wasn’t as crazy or pointless as it seems.” 

In a dark, pandemic-ridden year, it was just the kind of distraction we needed in our lives. 

Then at the virtual CES in January, LG generated even more buzz by teasing a short video of its Rollable phone, which CNET confirmed was real, with plans to go to market this year. 

But now it’s dead, without even a chance of ending up a trivia question like its predecessor, the LG Prada Phone. 

This story originally ran on April 5 at 5 a.m. PT. 

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