LG Loses $13 On Every Smartphone Sale

Despite design changes and favorable coverage, LG is having a hard time making a profit on smartphone sales. Engadget applies numbers to this harsh reality.

"If its mobile division didn't exist at all, LG would certainly be having a better year. It managed to rack up a $748.8 billion KRW ($667.7 million) operating profit and had its best quarter this year for revenue, despite losing KRW 146.3 billion ($130.5 million) selling smartphones. While it has lost over $400 million so far this year on mobile, LG is far from giving up hope on the division, though. It expects the five-camera V40 ThinQ smartphone will lift it next quarter, hopefully to some kind of profit."
The LG V40 ThinQ is the latest attempt from LG to turn the corner in the smartphone market. You can see the PocketNow video review below.
It has many favorable reviews and unique aspects that cause it to stand out in the crowded Android market. The ThinQ is a five camera phone: two in front and three in the back. Some reviewers consider the overall package a worthy rival for the Samsung Galaxy Note 9 and the Google Pixel 3.

That said, there is no reason to believe the V40 ThinQ will do any more for LG smartphone profitability than any other phone has done for it in the past. LG has always made differentiated phones with some notable technology that is reviewed favorably and priced competitively.

If anything, the ThinQ is a tougher sell. There are new smartphones with even more cameras, even bigger screens, even more radical designs that dispense with the notch altogether, and that cost even less. If LG is losing an average of $13 on every smartphone they sell now, the possible losses could get much worse on a phone with a more expensive bill of goods.

This problem is not unique to LG. prominent Android manufacturers such as HTC and Sony are also bleeding money from their smartphone divisions. All of these companies would be more profitable by discontinuing smartphone sales.

Microsoft famously tried to enter the smartphone market, arguably too late. They purchased Nokia. But that move did nothing to boost sales of Windows Phone. Now that Microsoft has exited the smartphone market, they are more profitable on the back of projects such as Surface.

There is no evidence that Google has ever turned a profit on their first-party phones. Samsung continues to be the best example of Android profitability. Samsung's smartphone profit share pales in comparison to that enjoyed by Apple and the iPhone.