Where LG’s Cheap Phones Are Outpacing Apple and Samsung – InBusiness

Where LG’s Cheap Phones Are Outpacing Apple and Samsung

While Apple and Samsung battle for smartphone market supremacy, Korean appliance maker LG Electronics has been quietly gaining ground.

LG, which makes phones running Google’s


Android operating system as well as dishwashers and air conditioners, climbed to third place in the U.S. smartphone market during the second quarter, according to Kantar Worldpanel. It grabbed 14% of sales–double its market share two years ago–and is trailing only Samsung at 35% and Apple at 32%.

But while LG started selling a new flagship phone, the G5, in April to compete head-to-head with Apple’s


iPhone 6S and Samsung’s Galaxy S7, the real gains for the Korean manufacturer have been in lower-priced segments of the market.

Fortunately for LG, those segments have been growing faster than the rest of the market.

Subscriber growth has nearly stalled overall for regular monthly mobile phone customers–known in the industry as postpaid phone subscribers. But growth is accelerating among customers who have to pay in advance: the prepaid subscribers.

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The generally lower-priced prepaid market has grown between 10% and 12% for the past two years, according to data compiled by research firm MoffettNathanson. The more expensive postpaid market has grown only between 4% and 5% over the same period.

But only about one-third of the postpaid subscriber gains have been from phone users while the remaining two-thirds have been from subscribers buying tablets or other devices. Put it together, and postpaid phone subscriber growth hasn’t exceeded 2% in more than five years.

The slowdown in postpaid phone growth is more of a challenge for manufacturers focused on selling more expensive phones–especially Apple’s iPhone, which has suddenly seen two consecutive quarters of declining sales. Samsung has some mid-range phones that are appealing to prepaid subscribers, but LG has really taken advantage of the prepaid boom. The trend has also helped manufacturers purely targeting the low end, like BLU and Huawei.

While LG’s flagship G5 was its bestseller, LG’s cheaper model–such as the $80 Sunset and the $60 Leon–collectively sold in much greater volume, Kantar noted. The cheaper phones are sold by prepaid brands like MetroPCS, owned by T-Mobile


, Sprint’s


Boost Mobile, and America Movil’s TracFone.

LG was the top-selling brand at all three prepaid carriers, accounting for 40% of MetroPCS sales, 31% of Boost and 34% at TracFone, Kantar reported.

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Prepaid carriers sell other cheap phones, but LG has the best name recognition, says Lauren Guenveur, director of consumer insight at Kantar. “LG is available and featured across most prepaid carriers you walk into, and although brands like ZTE are similarly on display, there is name recognition in that LG makes other electronic goods,” she says.

LG received vast amounts of press and accolades when it unveiled the G5, sporting a variety of replaceable modules, at the Mobile World Congress in Barcelona earlier this year. Yet, cheap phones like the Sunset were ignored.

Maybe next year, the low-end should get a little more respect.

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