LG intranet leaks suggest internal firesale of unsold, unreleased smartphones as biz exits the mobile market

Staff offered doomed handsets at knockdown prices in move reminiscent of HP's Palm episode

Following its decision to exit the smartphone biz, LG has reportedly started a fire sale of its unsold and unreleased assets, unloading them to staffers at a cutdown price.

Pics obtained from LG's intranet and leaked on Twitter show the company listing the LG Velvet 2 Pro (also referred to as the LG Rainbow) for the equivalent of ₩200,000, or roughly £125. The predecessor was sold carrier-locked for $599.

The bargain handset came with a few stipulations and caveats attached. For starters, would-be owners were warned the device would not receive any software updates, and would only have a six-month (later reportedly increased to 24 months) warranty. With only 3,000 units available, punters were limited to just two units per person, and were expressly forbidden to re-sell them.

LG abandoned the smartphone business in April after several punishing years of consecutive quarterly losses.

The company, which played an instrumental role in Android's early years, has faced stiff competition from local rival Samsung, as well as a bevy of Chinese competitors that devoured its market share.

LG had hoped to make a comeback during 2020, when then-president Kwon Bong-Seok was promising devices with "wow factors". One example was a rollable phone that would allow the flexibility of a pholdable, but without the thickness that inevitably follows. That device was reportedly put on ice in February without seeing an official commercial release.

Post-COVID moves

The company was arguably a victim of timing. Normally, reasserting yourself with a novel premium device would be a prudent strategy. But these aren't normal times, and the early months of the pandemic were particularly brutal for phone vendors.

Most vendors experienced a drop in revenue as the public deferred upgrades. High-end handsets were particularly affected because what's the point in buying a phone with a fancy camera when you're stuck at home?

LG has joined the small group of vendors that played a role in defining the smartphone, but have since switched gears (think HTC, BlackBerry, HP).

LG's fire sale is reminiscent of HP's clearout of unsold Palm stock in 2011, when the company purged its warehouses of unwanted HP TouchPad tablets at the knock-down price of just $99.

HP acquired the struggling Palm in 2010 for $1.2bn with the aim to become a viable competitor to Apple, Google, and Microsoft in the mobile space.

Although Palm had managed to develop a compelling mobile platform in the form of WebOS, it simply didn't have the financial muscle to wrest control of the market.

In the following months, HP released two new handsets and a tablet computer. All fared dismally, and the Touchpad especially so. During the first week of August 2011, HP sold just 100 units.

Ironically, the fire sale ended up giving a short-term boost to WebOS's user numbers as bargain hunters flocked to the platform for its swansong.

Perhaps more ironically, given the circumstances, HP ended up selling WebOS to LG, which adapted the tech for its smart TVs.

As for the iconic Palm marque itself, that was snatched up by TCL, which also owned the rights to the Alcatel and (briefly) BlackBerry lines. It released one Palm-branded handset in 2018 – a "companion phone" designed to be used with your main blower. We haven't heard anything since. ®