LG announced its exit from the smartphone market over a year ago. It wasn’t totally unexpected, given the company’s mobile division’s long-term deficits. It nevertheless left a big hole in the US smartphone industry, especially in the prepaid segment where LG was prominent.
In this new hole, another Android handset company may fill the void, perhaps OnePlus, which had lately begun selling inexpensive phones to the US. Maybe a Chinese brand like Xiaomi will eventually get into the US market.
Samsung, the obvious answer, was not a rival. In LG’s absence, Samsung’s A-series phones have been the big beneficiaries. Counterpoint Research claims Samsung’s A-series phones helped it improve sales by 11% year-on-year in Q4 2021. Galaxy A12 was best-selling Android handset in 2021, while Galaxy A32 5G was popular with Metro by T-Mobile, the country’s largest prepaid brand.
The US smartphone market was already a two-party system before LG left, and it is now considerably more so.
However, Motorola has gained some potential LG customers, while OnePlus has gained some traction. But the US smartphone market was already a two-party system before LG left, and it is now even more so.
While we’re at it, let’s name the loser, and it’s not LG. Despite his reservations about covering the company’s mobile segment, Avi Greengart sees it. In the end, LG’s phone division was losing hundreds of millions of dollars a year and had no apparent path to profitability. LG has many profitable goods and product lines. The cold, harsh logic of letting go makes sense.”
LG is fine. We, the consumers, have lost out because our choices have shrunk. We have one less alternative when it comes to choosing a new phone, and one less reason to avoid Apple and Samsung, the two market leaders in the US.
Since its launch last year, the Galaxy A32 5G has been a top seller in the US.
Why was Samsung a wise choice to replace LG? One is brand recognition. Wave7 Research analyst Jeff Moore argues that’s critical in prepaid. If you’re migrating from another prepaid provider, you’ll usually choose the most expensive free phone. And the brand name helps a lot. So when consumers move carriers, Samsung gets a huge boost.”
Samsung had an excellent logistical position. It already has significant ties to US cellphone companies. A lack of them hinders smartphone sales in the US In 2021, the business will have five A-series handsets in its affordable phone line.
Also, Samsung’s A-series phones are great. They’re usually the best option under $500. Samsung has also made significant software enhancements. For example, certain A-series smartphones get up to five years of security updates, the longest among US Android phones. It has also been working on bringing key OS updates to older devices. For example, last year’s A32 5G is getting Android 12 while other manufacturers’ new devices still have Android 11.
Samsung has five A-series phones in its affordable phone portfolio, ready to go.
According to Greengart, the corporation benefits from receiving many payments while selling a phone. “Samsung makes its own screens, semiconductors, and memory chips, so raising volume affects both the phone and component sales.”
Samsung had the motivation and the necessary pieces to go after LG’s lost market share, and it worked. Samsung had a 16% market share in the US in Q4 2020, according to Counterpoint. In Q4 2021, it was 22%. Samsung’s Galaxy A32 5G ranked fifth in January 2022, behind four iPhone models. Samsung has really underperformed due to stocking issues. “Shortages, notably for A-series devices, significantly hampered Samsung’s development potential,” says Counterpoint.
Motorola is now the only vendor offering a low-cost device with a built-in stylus.
Motorola also gained a lot. Motorola had a 5% market share in the US before LG left. After Q1 2021, it was around 10%. (12 percent share in Q4 2021, up from 3 percent in Q4 2020, according to Counterpoint.) The Moto G Pure helped a lot, and it’s a great smartphone around $200. That has propelled it to third place in terms of market share, but it trails Samsung by 10 or 20 percentage points depending on the quarter.
If Samsung and, to a lesser extent, Motorola were able to rapidly cover LG’s hole, are we truly missing out? Greengart and Moore agree. Aside from the ultrawide camera, Greengart mentions LG’s drive to innovate by becoming the first to put five cameras on a smartphone. “We lose something when firms try new things,” he argues.
He adds that LG phones were frequently discounted, making them a viable Samsung option. “LG always priced its phones like Samsung. They went up in price soon because they weren’t as good. A phone almost as excellent as Samsung for much less money… and now that phone is gone.”
While LG left some wiggle room in the prepaid market, Apple and Samsung unquestionably control the US. It’s hard to see that changing soon. Even a household name like Google hasn’t been able to break the duopoly. Moore uses the Pixel 6 as an example of what occurs when a rival actually goes after some market share. “Despite a full ad campaign, a well-known brand name, and availability on all carriers, Google Pixel had very low share figures.” Google is a household name, yet the Pixel remains a cult favourite.
Moore summarises the market, speculating that OnePlus may challenge the duopoly. We had hoped for a three-way game, but they’re still in the single digits, and it’s not even close.
Samsung didn’t take all of LG’s market share, but it did enough to solidify its lead. It’s game on.