LG just released its latest earnings report, and the results are a clear indication of how much trouble its smartphone business is in. LG’s second quarter mobile operating profit came in at just $172,000, which translates into 1.2 cents per phone. The numbers took OnePlus co-founder Carl Pei took to Twitter to show his surprise. He revealed that OnePlus makes more money than LG per smartphone, even though they sell smartphones almost at cost.
That’s less than what we make, and I thought we put user value first. Hats off to LG 👏 https://t.co/S1gN9gJg75
— Carl Pei (@getpeid) July 29, 2015
OnePlus, being a startup, cannot afford to invest heavily in advertising, but instead uses the Internet, social media and its forums to build the hype – which does not cost as much. The business model of the two companies are vastly different, but the latter’s strategy seems to be way more effective seeing how far they’ve come in a such a short time. Having said that OnePlus has managed to sell as many as 250,000 OnePlus One units just in India since its arrival eight months ago. It aims to sell one million handsets by the end of 2015.
Even though LG is investing heavily in advertising, it isn’t converting into sales. Even after releasing its flagship G4 smartphone with much fanfare, the company’s global smartphone shipments of 14.1 million units reflected a 3 percent decline from the same period last year. In its earnings report, LG even agrees that its overall profitably was affected by weaker demand in the premium segment.