LG looks for 20% growth in 2009 and 2010

Among the top tier handset-makers, the two Korean brands have consistently outperformed the market during the downturn, and LG is targeting ambitious growth of 20% in unit terms, both for the current year and 2010.
 
However, Skott Ahn, CEO of LG Mobile Communications, is well aware of the key cellphone challenge of 2010 - the shift of the smartphone from being a premium device to a mass market, keenly-priced one.
 
Though LG, with its traditional strength in the midrange, should be well-positioned, it has lagged behind rivals in delivering strong models that sport open operating systems and applications platforms - its real killer phones still run its own proprietary system.
 
However, it will benefit from its experience of creating the economics and supply chain to prosper in the low-margin reaches of the industry - and many observers expect its profit patterns to be better than those of most competitors.
 
This is because, while Android and Symbian phones may look increasingly alike, and will be forced to compete on price, LG is currently strong in creating highly differentiated handsets for which certain user groups will pay a higher price - even if they are not open OS.
 
The new Chocolate 2 (BL40) hopes to be one of those, with its innovative widescreen being heavily marketed in Europe, though the US has so far only given a carrier deal to the lower end Chocolate Touch (launching at Verizon Wireless this month).
 
Ahn was in Hong Kong to launch the Chocolate 2, the fourth in LG's most successful range ever, the Black Label Series. But he expects sales of Black Label models to be flat next year at around 10 million units (the series has sold 36 million units since the first Chocolate shipped in mid-2006).
 
While Ahn told the Wall Street Journal he thought LG's margins would not suffer as much as many from the coming smartphone price war, he predicted that LG's average phone price, currently around $139, could go down to $110.
 
Both the Koreans have similar strategies of spreading their bets widely, targeting huge numbers at the low end and for certain key midrange brands, and increasingly unleashing a few superphones to top up the margin (Samsung's gigahertz Jet, for instance, or LG's 12-megapixel Louvre).
 
Samsung's rise in market share during the third quarter shows that it is currently achieving its goals more effectively than its compatriot, leveraging its growing scale as it hits the 20% global share figure.
 
This week it boasted that its midrange touchscreen phone, the Star, had become its latest to cross the 10 million sales mark, just six months after its release. The Star, or S5230, reached this point more quickly than any Samsung phone before it, and becomes the sixth of the company's handsets to claim the accolade.
 
The Star has sold half its units in Europe, where it launched first, and has also been a strong performer in Latin America (1.6 million), Russia/CIS (900,000) and China (800,000).
 
“We've entered the era where full touchscreen mobiles are mainstream devices,” commented Young-hee Lee, VP of marketing for the mobile communications division. “Samsung is aiming to take the lead in the global touchscreen market with our diverse product line-up and customized, unique marketing approach.”
 
Other Samsung phones to join the 10 million-seller club include the E250 slider, which took 10 months to hit those volumes in 2006-7; the first model to reach the magic number, the T-100 clamshell in 2003; and the E700, D500 and J700.
 

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