What was expected has come. For the second quarter of this year LG Electronics expects a profit decline of 15%. Although the company has yet to announce the contribution of each business, analysts in South Korea have almost unanimously estimated that the unexpectedly low sales of OLED TVs will be the main reason for the decline.
LG already carries the burden of its lossy mobile business, which has been in the red for over two years. If the South Korean electronics maker does not change the strategy for its TV business in a timely manner, as was not the case with cell phones, then its record-breaking home appliance business may need to drive the business forward on its own.
Decline in sales and free exchange for burn-in
LG's OLED-TV growth is set to falter dramatically in 201
The decline in revenue is a direct result of the competing Samsung QLED push, which gained momentum late last year. LG delivered 344,000 OLED TVs in the first quarter of 2018. 369,000 were delivered in the second quarter; on the third 332,000; and on the fourth 519,000 to IHS. The company is expected to ship 381,000 units and 397,000 units for the first and second quarters of this year. Samsung's QLED television shows a more dramatic rise. In the first quarter of 2018, the conglomerate moved 337,000 QLED televisions. In the second quarter this rose to 538,000 units; and the third quarter 644,000; and nearly 1.1 million in the fourth quarter. In the first quarter of 2019, Samsung handled 896,000 QLED TVs, more than double the previous year. It is expected to move one million units in the second quarter, twice as much as a year ago.
It's not just the revenue that goes down but also the profits. A major reason for the decline in profits is that customers send their OLED televisions back, at least in South Korea, after the branding.
LG must provide a better guarantee for OLED burn-in.
LG currently offers a one-year warranty on its OLED TVs. A burn-in is not intended as a reason for compensation. In other words, if an OLED TV suffers from burn-in, it is not the company, but the customer. Unofficially, however, the company offers customers who complain heavily, but additional guarantees, the sources of a large electronics retailer for the company in South Korea. LG also sometimes offered a free exchange for customers who owned OLED televisions with serious burn-in cases. Despite the additional cost, these off the books beats compensations profits. More and more customers are using social media to engage the company and publish images of their OLED television with significant burn marks, indicating the problem of snowballing. Compared to a year ago, more and more videos for branding OLED TV have been released by consumers on popular platforms like YouTube.
However, there is one case that LG can learn from, which has recently happened to none other than LG itself.
See also: Fear and Trembling: LG Display faces the ax for OLED branding and market pressure
The company was involved in South Korea in a scandal that was caused by malfunctioning of clothes dryers month. The capacitors in LG's double tumble dryers with Tromm inverter heat pump sold in their home country reportedly did not wash out the dust properly. Dust would clog up the condenser and cause stench if not disposed of as indicated.
The South Korean electronics manufacturer initially denied the allegations. However, when more video evidence of the disruption surfaced online, the company gave in, granted a 10-year warranty and generally apologized to customers. LG did not admit that there was a malfunction in the dryers.
Thousands have joined a petition for a local closed social media app band asking LG to acknowledge the problem and threatening to report the incident to local fair trade regulators. A separate online petition was also filed with the Blue House, South Korea's counterpart to the White House in the US, calling on the company to recall the dryers and fully compensate consumers with over 28,000 signatures. The situation continues to escalate.
LG will either have to offer longer warranty coverage for its OLED TVs that are not cheap, or include burn-in as part of its official customer return policy, or preferably both. It seems to be a better option to bear the burden on the client himself than to face a possible class action lawsuit – especially since LG continues to claim that burn-in is not a serious problem.
Customer First: Dropping TV Prices
LG Electronics is the largest provider of OLED televisions. The subsidiary LG Display is the only provider of OLED panels it looks fitting. Understandably, the company is waiting for its subsidiary, LG Display, to increase its production rate to increase supply and lower panel prices. However, after Samsung overwhelmed the company with a renewed marketing campaign for QLED televisions and aggressive prices for ultra-large televisions, LG decided between market share and profitability.
This is the same dilemma facing LG's mobile business. When the company's G5 smartphone, the modular phone, failed on the market, the company had the choice to abandon the premium sector, where Apple and Samsung duopoly, or launch competitively priced models to gain market share. This decision was taken too late and phone prices were lowered late, as Huawei already flooded the market with low to mid-end smartphones to gain market share.
See also: LG mobile continues to sink feeling
The OLED TV situation of LG is more optimistic than in the mobile market. OLED televisions remain popular with customers, and brand loyalty is still a factor in favor of LG. The main reason for customers who sometimes even voluntarily ignored the possibility of branding was the price. LG's OLED televisions are usually 20-50% more expensive than the Samsung and other offerings, despite the recent price reductions. The South Korean electronics giant must give up short-term profitability and even reduce the price before the holidays of the third and fourth quarter on its own from dramatically. As the only major provider of OLED TVs on the world market, the decline in prices would not affect the premium brand image of the TV as much as it does with smartphones, as OLED continues to be as superior as LCD over the last seven years.
Combined with an improved warranty policy that puts customers first and not profits, Samsung may still have a chance to fight Samsung's QLED push. LG is already six months behind its rival, so it is now or never.
LG expects Q2 earnings down 15% due to weak OLED and mobile phone sales
Analysts expect LG's mobile business to lose around 200 billion won in operating revenue the second quarter.  LG CNS Applies Blockchain to School Lunch
It will be based on LG's Monchain blockchain platform.
LG OLED TV at the US Retailer Shows Burn-In An LG OLED TV sold by a US retailer has shown signs of burn-in, although it's likely to be on the shelves for only a year and a half.
Samsung Starts OLED Production for Galaxy Fold
] Samsung Display has begun mass production of foldable OLED panels for the Galaxy Fold smartphone.