Just a year ago, LG announced it was exiting the smartphone business. That’s not a completely surprising move, as the company’s mobile division has been losing money for years. Still, it left a huge void in the U.S. smartphone market, especially in prepaid devices where LG has a strong presence.
This new opening presents an interesting opportunity for another Android device maker to fill the void — perhaps OnePlus, which recently started bringing budget phones to the US. Or maybe a Chinese brand like Xiaomi can finally gain a foothold in the US.
Samsung is clearly not a challenger. Samsung is already the second-largest smartphone brand in the U.S., and its A-series phones have been big winners in the absence of LG. According to Counterpoint Research, Samsung’s A-series phones contributed to its 11% year-over-year sales growth in the fourth quarter of 2021. It noted that the Galaxy A12 is the best-selling Android device in the U.S. in 2021, while the Galaxy A32 5G is the best-selling product in Metro from T-Mobile, the largest U.S. prepaid brand.
Long before LG left the field, the US smartphone market was a two-party system, and with LG gone, it’s even more of a system
It’s not a complete slippery slope; Motorola has some potential LG customers, and OnePlus does gain a little traction. But the U.S. smartphone market was a two-party system long before LG left the field, and with LG gone, it’s more of a system.
When we announce the winner, let’s be clear who the loser is, which of course is no LG. Longtime tech analyst Avi Greengart can see this, though he has his say about covering the company’s mobile division. “Their coverage is exciting, but the bottom line is that LG’s handset division is losing hundreds of millions of dollars a year and has no clear path to profitability. LG as a conglomerate has a ton of profitable products and product lines. Cold, hard logic Relax it, it does make sense.”
LG is having a good time. Those of us who buy smartphones now have less choice on our store shelves, and we are the losers. When it comes to picking out a new phone, we have one less choice and one less reason to stay away from Apple and Samsung, the dominant brands in the U.S. smartphone market.
The Galaxy A32 5G has been one of the company’s best-selling devices in the US since its debut last year.Photo by Alison Johnson/The Verge
What makes Samsung a good candidate to fill the LG vacancy? Strong brand recognition, for one thing. That’s especially important in prepaid, said Jeff Moore, an analyst at Wave7 Research. “As a general rule, if you switch from another prepaid carrier to a prepaid carrier, you’re going to choose the most expensive free phone. The brand name helps a lot with that. So when people switch from one carrier to another This provides a huge tailwind for Samsung as a carrier.”
Samsung is also in a good position logistically. The company already has strong relationships with U.S. wireless carriers. Without them, it would be difficult to sell smartphones in the US. The company is also readying affordable devices with no fewer than five A-series devices in its budget phone portfolio by 2021.
There’s also the fact that Samsung’s A-series phones are pretty good. Typically, they are the best option at every price point below $500. Samsung has also made important improvements on the software front. It offers the longest security support policy of any Android phone sold in the US, with some A-series models getting security updates for up to five years. It has also been working on upgrading major OS versions to older devices as soon as possible. Case in point: Last year’s A32 5G started shipping with Android 12, although new devices from other manufacturers are still shipping with Android 11.
Samsung is ready with affordable devices, with no fewer than five A-series devices in its budget phone portfolio
As Greengart points out, the company also has the advantage of getting paid more than once for selling phones. “Samsung uses its own displays, and in some cases, its own semiconductors, and its own memory chips. So increasing sales will not only affect phone sales, but also component sales.”
There’s no doubt that Samsung has the drive and the right pieces of the puzzle to catch up with the market share vacated by LG, and that strategy has paid off. According to Counterpoint’s report, in the fourth quarter of 2020, Samsung had a 16% market share in the United States. In the fourth quarter of 2021, the figure was as high as 22%. In January 2022, the Galaxy A32 5G ranked fifth in U.S. sales, behind only four iPhones. If anything, Samsung is underperforming, thanks to inventory issues with its products. Counterpoint noted that in the second quarter of 2021, “shortages, especially of A-series devices, have somewhat stifled Samsung’s growth potential.”
After LG pulled out, Motorola is now the only manufacturer to offer a budget-friendly device with a built-in stylus.Photo by Alison Johnson/The Verge
Motorola’s gains were also significant. Before LG left the field, Motorola had about 5% market share in the US. After the first quarter of 2021, it jumps to around 10%. (Counterpoint pegged its share in the fourth quarter of 2021 at 12%, up from 3% in the same period in 2020.) The Moto G Pure, in particular, helped, at a sub-$200 price point. stand out as a very good device category. That’s enough to push it into third place in market share — but it’s well behind Samsung by 10 or 20 percentage points, depending on the quarter.
If Samsung and Motorola can fill the void left by LG so quickly, are we really missing a lot by its absence? Greengart and Moore both think so. Greengart also pointed to LG’s willingness to innovate, noting that the company was the first to put five cameras on a smartphone and the first to complement the main rear camera with an ultra-wide-angle camera. “We do lose something when companies trying different things leave the market,” he said.
He also noted that LG phones are also frequently discounted, making them an attractive alternative to Samsung. “LG always priced its phones on par with Samsung. Then they quickly dropped in price because they weren’t as good. That opened up a bargain: a phone that was almost as good as Samsung, for the price. much lower…and [now] That phone is unavailable. “
Even a well-known brand like Google can’t break the duopoly
LG has left a little room for mobile in the prepaid space, but overall, the US is undeniably dominated by two brands: Apple and Samsung. It’s hard to imagine such a change happening anytime soon. Even a well-known brand like Google can’t break the duopoly. Moore cites the Pixel 6 as a case study of what happens when challengers put all the pieces together and really go after some of the market share. “Despite the full ad blitz, good established brands, and availability on all carriers, we’re getting a very, very low share of the Google Pixel.” It’s hard to imagine a brand more household name than Google, but the Pixel remains a favorite.
Moore summed up the overall market situation, commenting on speculation that OnePlus could succeed in a duopoly. “There’s some hope that maybe they can make it a three-man game … but they’re still in the mid-low single digits and it’s not really a game.”
Samsung hasn’t grabbed all the market share left by LG, but it has gained enough to cement an already insurmountable lead. Game, set, match.
