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Tough times ahead for LG and Sony

September 23rd, 2013 at 3:35 PM
LG Sony Smartphone Sales Analysis

Apple’s announcement of selling 9 million iPhones during the debut weekend of 5c and 5s is a bit of a nightmare for Asian vendors who are rolling out brand new, high-end Android models right now. The expanded distribution and new color choices gave Apple an 80% bigger iPhone launch weekend than in 2012.

This is particularly painful for two vendors who have tried to stage global comebacks in 2013. LG is expected to roll out its pricey new Vu 3 model in South Korea later this month and expand its shipments to other markets in October and November. Sony is rolling out the equally expensive Xperia Z1 in India right now. The timing for the Vu 3 and Z1 launches could not be more unfortunate.

Both the Vu3 and Experia Z1 are priced in 40,000 to 45,000 rupee range in India — above the iPhone 5c and roughly 10-20% below the iPhone 5s. This pricing ambition may well put LG and Sony into a very tight spot in coming months. The rapid sell-outs of the gold iPhone 5s might have meant small early production volumes, as many industry sources anticipated.

But now that Apple has announced the 9 million unit weekend sales number, it’s clear that early consumer demand is running well above Wall Street and industry projections. It could be that new color options are far more effective lures than had been anticipated, particularly in Asia.

This Christmas could well turn out to be the period when the high-end smartphone market finally experiences a decisive shake-out. Samsung is prepping an ultra-aggressive marketing campaign for the Galaxy Note launched in September. Apple has found an entirely new volume gear. Smaller brands like LG, Sony and HTC are still targeting the $600-plus smartphone bracket aggressively, but it will be highly likely some or all of them will be reconsidering their product plans before the year closes.

The Christmas season is the most important period for the global handset industry, but the decisions of all of these smaller brands to roll out big luxury models globally right after Apple and Samsung’s flagship launches is starting to look risky indeed.

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