Here's a concept: sell cheap,
low-margin phones while the economy is in the dumps in order to grow market share. Brilliant,
right? Believe it or not, that's the idea that's being pushed around at LG headquarters, as the company has revealed a goal of increasing its global handset market share to at least 10 percent during this year. The company does expect profits to shrink over the course of 2009, but it's still hoping for a high single-digit percent profit margin on mobiles, against 11 percent in 2008. According to Skott Ahn, President and CEO of Mobile Communications at LG: "Developed markets will definitely suffer some contraction, but there's a chance for growth in first-time buyers in emerging markets." So, what does LG really have to do to hit 10 percent? Maintain its sales volume at 2008's level, which was moving some 100.7 million across the globe.
posted Feb 18th 2009 5:39PM
So manufacturers are finally trying Nokia's model, eh?
Exactly, Nokia has been doing this for years. It's how you establish Name Recognition.
Yeah...look what this did for Motorola. Good idea LG...dimenished innovation with developed market contraction does not gain you market share in the long term. It may bring you short term gains in emerging markets....but it is the kiss of death long term. You can have an inexpensive range, but not at the expense of quality mass market and high end phones. It's that developed market contraction that will kill them....you will be known as a "cheap phone" manufacturer.
I can see how that mentality of "cheap phone" manufacturer can be applied to the American market, but I don't think that applies to the rest of the world. Europe and Asia know that Nokia phones command respect, because while they started off with their simple Nokia phones, they've been upgrading to the Nseries and Eseries phones.
The reason Americans don't think highly of Nokia is because they haven't put that much effort into the American market, and honestly, rightly so. While we've made strides in the past few years, we're still behind as a general whole (not simply the technorati that obviously look at this website), so while I think Nokia could push more here, especially in this economy, investing millions/billions into an unpromising market isn't exactly fiscally sound.