LG Bets Big on TV Design

The Korean electronics company unveils sleek plasma and LCD sets it hopes will rival Sharp, Samsung, and Sony models in the digital TV stakes

by Moon Ihlwan

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After generating buzz in the cell-phone industry by launching innovative models that, among other things, beat Apple's (AAPL) iPhone in the race to launch a touch-screen model, South Korea's LG Electronics is now gearing up a similar design-focused strategy in the fiercely competitive TV market.

In the battle for new features, digital technology allows LG and rivals like Sony (SNE), Samsung Electronics, and Sharp (SHCAY) to fight to a draw. So, in a world awash with digital and high-definition TVs boasting super picture quality, LG executives believe striving for technological superiority won't win consumer hearts. "In the TV market, design will be a critical differentiator this year," says Simon Kang, president in charge of LG's digital display unit.

That's why at the just ended annual Consumer Electronics Show in Las Vegas the Seoul company unveiled a pair of sleek TVs that it hopes will be game changers. With the help of the two innovatively designed models, one using a liquid crystal display (LCD) screen and the other a plasma panel, LG aims to boost its flat-panel television sales to 17 million sets in 2008, up nearly 90% from 9 million last year. In the first nine months of 2007, LG's flat TV revenues rose 24.7% to $5.3 billion, according to market researcher DisplaySearch.

Tough Fight Against Well-Established Japanese Brands

LG's goal is to get a place in the digital TV club of top three global makers. Samsung and Sony have established themselves as the most influential TV brands, seizing market shares of 18.4% and 12.2%, respectively, in the first nine months of 2007, DisplaySearch statistics show. Sharp placed third with 10%, followed by LG, Philips (PHG), and Matsushita Electric Industrial (MC), which sells TVs under the Panasonic brand name; all had a share of between 9.5% and 8.5%.

It will be an uphill battle, particularly against Japanese companies with greater brand value (BusinessWeek, 12/18/07). The biggest challenge will be in the sale of LCD TVs, which account for more than 80% of the total flat-panel global market. (Industry officials estimate the total market will be between 110 million and 115 million sets in 2008, up nearly 30% from last year.) LG's target is to double its LCD TV sales, to 14 million units this year, from 7 million in 2007. "LG doesn't have [the] brand clout of its Japanese rivals," says Harrison Cho, electronics analyst at Seoul-based Mirae Asset Securities. "Such an enormous volume expansion isn't realistic." Cho forecasts LG's LCD TV sales at between 10 million and 12 million sets.

LG is betting on its eyeball-grabbing designs to fulfill its ambitions. "Consumers are bound to make a stop in front of our new products, making it easy for salesmen to start explaining their features," says Kang. LG's new LCD model, codenamed LG60 and billed as the world's thinnest, has a big hole in the lower center of the panel that works as a power button. The black panel surrounding the hole vibrates to work as a speaker. The TV's glossy red back, when seen from the front, forms a red line around its frame. "We seek an intuitive interaction with consumers," says Kim Tae Bong, chief designer in charge of LG's TVs and other display products. A gentle touch of the hole will trigger a unique sound as a red light blinks before turning into white blue while it is being turned on.