LG is Losing Ground to Apple’s Old Models

13 May

LG is Losing Ground to Apple’s Old Models

It’s one thing when you’re best is losing a head-to-head battle against your competition’s top products, but what do you do – and what do you think – when your best is still being outsold by a company’s earlier model? That seems to be the spot LG finds itself in these days.

Apple’s last four-inch screen iPhone was released way back in September 2013. Since then, the 5, 5S, 6 and 6Plus all had larger screens, essentially “catching up” with the competition from Samsung, LG, and others. At least on paper.

But the real tale of the tape – the sales – offers a much different story. In 2015, Apple sold more than 30 million older iPhones with four-inch screens. These were older models, with less new tech than their competition. But, apparently, when it comes to smartphones, maybe size doesn’t matter.

Cho Ju-no, CEO of LG, disagrees. Not long ago, Cho went on a bit of a rant about Apple bringing substandard, boring handsets back into its lineup. This commentary was in reference to the upcoming iPhone SE, which is Apple’s version of an upgraded 5S.

Cho talked about “adding value” and delivering “fun and exotic” products to customers, specifically touting the LG G5 handset. He scoffed at the SE rollout, calling it “same old technology and features.”

Cho piled on, saying cost-effectiveness is not the top priority. Instead, manufacturers should offer special customer value. He finished by saying he didn’t care much for Apple’s product.

Now, all of this is primo content. It’s the sort of fire-breathing customer-centered vows and vision you want from your CEO. But that doesn’t change one simple fact: LG is losing. Apple is selling iPhones – even the old, obsolete ones – like proverbial hotcakes. Consumers want the brand and the identity more than they do the model or even all the bells and whistles.

Sure, some people will go after the larger screens, better cameras, and other features, but those customers would do that anyway. They’re not buying Apple because they’re not buying Apple. However, consumers loyal to Apple put up with “inferior” products for years to earn the other benefits of having an iPhone – connectivity, collaboration, and equipment crossover between other Apple products.

Cho is right to say his company should not copy what Apple is doing. He needs to keep coming up with new and better … but LG also needs to find a way to instill the sort of customer loyalty that would cause a consumer to buy LG without even considering the competition. Because that’s what he’s up against.

David Firester specializes in intelligence analysis and is based in New York.

One Response to “LG is Losing Ground to Apple’s Old Models”

  1. robertcarlsonblog June 20, 2016 at 12:48 #

    Great insight Dave.

    Like

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