LG Smartphones Rebound, Face Steep Competition

The South Korean company struggled to contend with Samsung and Apple as consumer demand increased for high-end smartphones. After seven disappointing quarters, LG rebounded by focusing on its own high-end smartphones, powered by Android, as well as growth in 3-D television sets. Although the company reported overall losses, its mobile and television divisions returned a profit, showing its push to invest in research and development in 2010 is paying off.

LG strengthened its sales by introducing smartphones running on Google's Android OS, like the Nitro HD. The company highlighted the strengths of its sharp displays and quick processors, emphasizing higher-grade hardware, and these models sold well.

The company further improved its position as a quality handset maker by partnering with Intel to introduce a new smartphone model driven by Intel's processors. LG will receive a subsidy for placing Intel's chips in its smartphones, in addition to cementing its push for top-notch hardware.

Verizon began selling the LG Spectrum in January. The 4G phone boasts strong battery life, HD video, and can upgrade to Android's Ice Cream Sandwich. The phone exemplifies LG's strategic shift into the lucrative higher-end of the smartphone market, and the company likely will continue to push in this direction, especially since it is yielding profits.

LG, however, faces steep competition as it moves further into upscale smartphones. Its new handsets encroach on Samsung's terrain, and the South Korean companies are likely to engage in intense rivalry.

The company must also contend with Apple's iPhone juggernaut and fellow upstarts like Windows phones from Nokia. Finally, with RIM plotting a comeback, the market is expected to be saturated with various smartphone offerings.

LG's strategic shift into the high-end smartphone market is paying off for the company, but the company's continued success in the mobile market depends on its ability to distinguish itself from the deluge of smartphone options and come out ahead.