LG – Glutton for punishment

LG’s new tablet is likely to be a license to lose money.

• It appears that one disaster and the travails of almost all of its peers is not enough to dissuade LG from launching another tablet.
• The forthcoming G-Tab with an 8.3” screen, a 1920×1200 display and a Qualcomm Snapdragon 800 chipset is expected to be launched at the IFA 2013 trade show in Berlin between September 6^th and 11^th.
• LG is expecting to sell 100,000 units a month or 0.3m units per quarter but whether it will make any money at those volumes is highly questionable.
• To be frank I am not sure why LG should even expect to ship that many tablets as I can’t see anything that sets it apart from the competition.
• The tablet market has become very concentrated with Apple and Samsung at the top with 50.4% between them and the cheap and cheerful white label tablets at the bottom 33.3%.
• That leaves 16.3% or 7.3m tablets for everybody else.
• LG has neither the brand power of Samsung, the money of Microsoft nor the PC volumes of Asustek, Acer and Lenovo to help push this device and consequently it looks doomed to failure.
• This essentially means that LG’s margins are likely to be negatively impacted by this device.
• This is something that LGE can ill-afford as its Android devices are un-differentiated and have nothing that makes them stand out from the competition.
• Hence, volumes will be dictated by price meaning that margins will remain wafer thin at best.
• Adding yet another loss-making device on top is something that the company can ill-afford.
• I remain negative on the outlook for LG.