What a blunder. LG had a contract to build first Android phone, but walked away from the deal

Wow! Is this LG’s biggest strategic blunder or what?

According to Wall Street Journal (subscription required), back when Google was still working on it’s mobile OS in secret, they had a deal with LG to build the first Android phone.

Then LG backed out of the deal, and Google had to turn to HTC for the Android launch hardware. The rest is history, as they say.

LG went on to tinker with its Chocolate franchise and build iPhone wannabe’s like LG Prada and Arena. Then they made an ill fated strategic bet on Windows Mobile in early 2009, just as Microsoft was end-of-lifing the OS and switching its development resources to Windows Phone 7. Leaving LG without the needed expertise and competitive hardware  in 2010, just as smartphone growth exploded.

I wonder what prompted LG to drop Android back in 2007? My guess – it was their hubris.

Remember – 2007 was the year the first iPhone launched with great success. And LG was the only company in mobile who had a very similar device, that was almost ready to ship on the day Steve Jobs announced iPhone. That was LG Prada KE850.

LG’s contract with Google for the first Android phone must have been for a Blackberry look alike device, just like those first Android prototypes. Come to think of it, I actually never learned who made those first prototypes. Could it have been LG?

When Google decided to reset its Android development efforts, and make a full screen touch phone, LG balked. In their minds – they were far ahead of the industry to make a true iPhone competitor. In early 2007 LG managers were walking around and telling everyone who’d listen that Apple stole LG Prada design to make an iPhone. And they already had LG Viewty in advanced development. A phone far ahead of iPhone in every spec you can name, that must have been screaming “iPhone Killer” to LG execs. All they needed to do, was to tweak software part a bit. Why the heck would LG share their touchphone lead with Google?

Only tweaking that software to make a desirable touch phone turned out not to be as easy as it seemed. Even LG Arena, a touchphone launched two years later – in 2009, with a fancy S Class touch interface, was a usability nightmare compared to iPhone.

In the meantime, HTC went on to build the first Android smartphones, bet heavily on Google, and today is the 4th most important player in smartphone market. Shipping tens of millions of devices and raking in tons of cash.

While LG’s mobile division is bleeding money, and is still considered to be a bit player among smartphone vendors.


Author: Stasys Bielinis

While I like to play with the latest gadgets, I am even more interested in broad technology trends. With mobile now taking over the world - following the latest technology news, looking for insights, sharing and discussing them with passionate audience - it's hard to imagine a better place for me to be. You can find me on Twitter as @UVStaska'

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  • http://pulse.yahoo.com/_DPVH6XYYDBZOWA2QYZBH6RFYXE Realityhurts

    stupid LG.  They were so successful back in LG Vu and LG Dare days.

  • Charles West

    Why doesn’t this surprise me? 

  • Fshlj

    Prototypes were from HTC, evolved tot ChaCha

  • http://www.blackflycomic.com Motmaitre

    The LG Viewty was both a fantastic phone and a runaway commercial success. LG was doing very well without Android. They had great hardware, design and software. Their problem was a failure to modernise as fast as the rest of the industry. Their app store is a joke, and they have no tentpole phones after the Viewty. However, they still have fantastic phones showing their flair for design, like the gorgeous LG Mini.

    They are only one geenration behind, in an industry where product life cycles are extremely short (the iPhone and Android are already looking dated compared to fantastic new models like the Nokia N9). I wouldn’t count them out yet.

  • http://www.facebook.com/danieleran Daniel Eran Dilger

    LG’s Prada phone used Adobe’s Flash Lite to build its user interface. So LG was betting on Flash just as Apple was ignoring the mobile limited Lite version and complaining that the PC/browser version was too big and heavy to run on mobile devices. 

    You can complain that LG should have seen more potential in Android, but in early 2007 Android was just a weak, alpha copy of Windows Mobile, which LG already had. Its larger mistake was betting on the whole Java/Flash platform, failing to see anything bigger and better. Apple didn’t just regurgitate what everyone else was doing in mobile platforms; it brought its desktop OS X to the iPhone.

    As it turned out, Android chased the same thing LG and everyone else had: Android is a modified Java platform that uses Flash for web content. That has resulted in poor energy efficiency and a big lawsuit from Oracle, not to mention that Flash wasn’t ready for smartphones until the end of 2010, three years after Apple turned it down (even as ignorant observers whined about Apple “failing to support” Flash).

    Instead of beating up LG for hedging its bets against Android, you could point out that LG is selling a lot of phones and isn’t completely dependent upon a platform that everyone is suing for IP infringement. 

  • Anonymous

    Sounds like a plan to me dude. Wow.

  • http://pulse.yahoo.com/_K3MVOVHEK4AZY777NI5KWHGL5U David Jenkins

    Congrats, Staska, you only used “it’s” incorrectly one time. Almost there!