After struggling to compete with the iPhone and other high-end smartphones, LG Electronics chief executive Nam Yong has resigned this Friday in wake of poor financial performance.
Yong is the latest in a series of mobile phone makers ‘executives that have resigned or been ousted after lack of sales in the smartphone market. In the course of a week, Nokia’s CEO, Chairman, and smartphone chief all announced their resignations.
Bon-joon Koo to Replace Nam: Yong Nam will be replaced by Bon-joon Koo, who is currently the CEO of LG International, the trading arm of LG. Koo will assume the role of LG Electronics’ CEO on Oct. 1. Koo has held senior management positions at multiple LG units. He was the first CEO in the LG Philips LCD joint venture. According to LG: Bon-joon Koo, “a member of the founding family of the broader LG conglomerate,” will replace Yong as CEO. He was previously an executive at LG Display.
Declining Profits of Smartphones: According to a report, “Numerous makers, including Nokia and LG have attributed declines in profit margins to pressure by other smartphone makers such as Apple Inc. and Research in Motion.” Although Nokia and LG are ranked number one and number three in global handset shipments respectively, they have, for the most part, been shipping budget low-margin handsets, rather than pricier offerings that can compete with the iPhone or BlackBerry.
LG’S Poor Market Performance: In August, Research firm Gartner called LG’s strategy “risky.” After analyzing second quarter data, Gartner noted that LG’s average selling price fell 27.7 percent even as handset sales fell year-over-year. LG managed to hold on to its second-place ranking of mobile OEMs in the U.S., but the Korea-based company was missing from the list of “Top Smartphone Platforms.”