LG Electronics back on track with smart appliances

LG Electronics this week posted an operating profit, signaling that the global electronics maker is getting back in the groove with well-paced strategies and cutting-edge technologies.

LG Electronics, the world’s second-largest flat-screen television maker and third-largest handset maker, has been avidly making its way up in the smart device industry under the guidance of its CEO Koo Bon-joon to prove it has what it takes to be a first-tier player.

The company on Wednesday posted 13.15 trillion won ($12.19 billion) in sales and 130 billion won in operating profit for the first quarter of this year on the back of increased sales of products from its home entertainment unit such as TVs and home appliances.

“LG has basically been making progress in all aspects, especially in TVs, so it looks like the company will definitely be looking up towards the latter part of this year,” said Park Gang-ho, an analyst at Daishin Securities.

The company’s handset business also appeared to be improving rapidly, based on new flagship lineups of smartphones and devices, namely those such as the Optimus 2X, a premium smartphone from LG Electronics is being well received by consumers.

LG’s mobile communication unit was able to narrow its losses significantly in the first quarter to trigger sanguine forecasts about the upcoming quarters. 

LG officials also said they expect a better second quarter.

Cutting-edge 3-D technology

LG Electronics latest recovery is being attributed to a number of strategies, but at the top is its latest 3-D technology called the film-type patterned retarder.

It is being commended by not only LG itself, but also from global television set makers and laptop companies that see FPR as a cutting-edge technology that may change the 3-D landscape forever.

FPR depends on a new kind of method for realizing 3-D vision, experts said, making it easier on the viewers when watching 3-D, which can often be a dizzying experience.

FPR also is much cheaper than the existing shutter-glass technology. There are also no battery-charging glasses involved; FPR uses a film on the glasses, instead of batteries, so the 3-D glasses are lightweight and don’t have to recharged.

In China, LG has been making significant headway.

LG formed an alliance with leading Chinese television makers late last year with the aim of securing “first-mover” advantage in the market for value-added and premium sets. LG says that in China, LG 3-D TVs using FPR technology has secured almost a 50 percent market share.

The U.S. and Europe are going to be the next targets for LG as they continue to make foray into the global 3-D markets. U.S. TV maker Vizio and Philips of the Netherlands are set to launch 3D TVs with FPR technology from April, sources said.

Smartphones to boost mobile business

LG, despite a slow start in the smartphone business, sold 24.5 million handsets worldwide during the first quarter of this year to prove that its mobile phone division also is ready to make a comeback.

LG Electronics spokespeople said the company’s Optimus One smartphones, which are cheaper compared to its competition, are selling well in all parts, but especially in North America.

LG is forecast to improve its global smartphone share to 5 percent by the end of this year, according to experts.

LG is now hoping to sell up to 6 million smartphones this year, according to industry sources. The company also plans to release 20 sets of smartphones this year.

In total, more than 4 million Android-based smartphones will be unleashed by LG this year, officials said.

To keep developing new lineups to retain the edge it needs, LG has said it would be making the right investments, both financially and for human resources.

LG Electronics earlier this month held a Techno Conference in the U.S. in a bid to recruit top-caliber engineers and experts. The company has held the conference since 2005, but competition this year was particularly fierce, company officials said.

They added that Koo has been particularly supportive of the conference, saying that overseas talent was crucial in helping LG secure its footing.

LG Group, in collaborative efforts, has already indicated it will be assisting the electronic arm’s initiatives by beefing up its research and development efforts focusing on energy, displays, home electronics and health care.

The group has said it will increase its researchers and R&D budget by about 25 percent to about 3,100 and to 4.7 trillion won ($4.1 billion) this year. About 5,000 of 9,000 new recruits would be allocated to R&D sections.

Smart appliances leading the way

Smart appliances are still new, but LG hopes to make a mark in the market and put the LG name on the smart appliance map.

This vision may be realized sooner than expected, LG has recently rolled out a smart refrigerator and will continue to unveil new products.

LG recently said it would be rolling out smart fridges, washers and other appliances in South Korea and North America by the end of this year to compete against rivals including Samsung Electronics and Whirlpool.

LG ― true to its reputation as a household name in the global home appliance market ― has seen an increase of 21 percent from last year, reaching 2.69 trillion won in sales and 10.27 billion won in operating profit.

Market research firm Pike Research predicts the global market for smart home appliances will take off in earnest in 2013 and reach $26.1 billion in sales by 2019.

By Kim Ji-hyun (jemmie@heraldcorp.com)