Wednesday, June 28, 2006

LG hopes "Chocolate" will sweeten its handset business

The Financial Times reports that LG Electronics is hoping its new “Chocolate” mobile phone might be a “Razr Killer."

According to the article, "the Chocolate phone, the first model in LG’s premium Black Label series, has become a big hit in global markets including the UK, China and Mexico as well as the home market. More than 1m Chocolate phones have been sold in overseas markets in just seven weeks since its global launch in May. The phone was ranked as the all-time best seller by Carphone Warehouse, Europe’s biggest mobile phone retail chain. About 450,000 units have been sold in the Korean market alone since its debut in November."

Carolina Milanesi at Gartner said, “I think the Chocolate is a nice little phone; wonderful design – the novelty of the LED keys and good usability. It does have the potential to be as successful as the Razr,. The only thing that might have a negative impact on this is that the Razr had the strength of the Motorola (MOT) brand.”

The article looks at LG's efforts to gain share in Europe and tackle the GSM market. However Daniel Kim at Merrill Lynch was skeptical, saying “The likely success of Chocolate phone in the European market cannot save its handset business. LG has no cost advantage in a low-to-mid end market against Nokia and Motorola, while the premium market is already crowded.”