LG to launch home PCs and mobile phone in August 2001

By , agencyfaqs! | In | June 08, 2001
To accelerate the growth of its IT business, LG is launching home PCs and mobile phones. It also plans to set foot in the OEM market and the assembled PC market


When Bindra joined LG in April 1, 2001, as general manager, sales and marketing (IT Products) his mission was clear: make LG equally known for its IT products as it is for its consumer durables. Twelve days later when Ajay Kapila, vice-president, sales & marketing, and the most well known face of LG announced his resignation, things may have seemed shaky from the outside. But for Bindra it was an opportunity - an opportunity to take charge and push growth of its IT business by more than 100 per cent, and take the turnover up to Rs 500 crore from Rs 240 crore last year.

Broadly the company is taking three major IT initiatives to achieve its objective. First, it plans to launch home PCs and mobile phones; second, it plans to foray into the OEM market; and third, LG is venturing into the assembled PC market.

The IT department at LG is busy working out the logistics of the launch currently, considering the fact that Bindra has been having a string of meetings for the past one week. However with regard to details of the home PC launch, Bindra is not willing to talk yet. The only information he parted with was that, "At the moment we are deciding whether we should go for a test launch or an all-India launch. If we decide for a test launch then the home PC will be launched in Delhi." The PCs will be assembled in the Greater Noida factory. The mobile phones however will be imported from Korea.

Getting a foothold in the branded PC market, which is currently ruled by the likes of Compaq, Hewlett Packard, Wipro, Zenith, IBM and now Dell, is not going to be an easy task. But that does not dampen the spirit of Bindra, who believes, "LG's strong brand equity should help us tide over this issue to an extent. Moreover, we are very bullish on strengthening the association of the LG brand with IT products in the consumers' mind."

For its OEM alliances, LG is talking to the six major computer manufacturers including Hewlett Packard, Compaq, Wipro for its monitors. Explaining the need to enter the OEM market Bindra says, "This arrangement will help us increase the volume of PC monitors and give the break even on the assembly line very soon." But will this not dilute LG's brand equity? "It will not dilute the brand because we are looking at a total of 5 lakh monitors this year, out of which 4.5 lakh are going to be under the LG brand and the rest will be supplied to OEMs," replies Bindra.

"The other interesting thing we are doing," continues Bindra, "is that we are working out a way whereby we can have synergies with other computer manufacturers to give good package deals to the PC assembler. They would otherwise be running from pillar to post to get all the components to assemble the PC. And since we are the first ones to enter the assembled PC market, we have yet to work the business aspect of it."

Simultaneously, the company is working on ground level activities to make its presence felt in IT products. To increase penetration in the four major IT markets of Delhi, Mumbai, Bangalore and Calcutta, the company plans to organise more events to generate excitement. "This helps us strengthen our dealer network and also get closer to the reseller," says Bindra.

Apart from these, the company plans to launch exclusive LG brand shops, where the prime focus would be on displaying the IT products and not on sales. By year-end, the company hopes to launch six brands shops in Delhi, Mumbai, Bangalore and Calcutta. The first one would be opened in Delhi.

Currently, LG's IT product portfolio comprises combo-models of DVD ROM and CDR/W, monitors (Flatron being the flagship brand), LCD TV monitors, MP3 players and soon, notebook PCs, mobile phones and home PC's will be added to the list. The company has invested $10 million in setting up the PC monitor assembly plant, which became functional on May 21, 2001. It has a capacity of manufacturing 3.5 lakh units per year and LG hopes to upscale it by 5 lakh units this year.

© 2001 agencyfaqs!