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Phone Vendors Follow Carriers Into Tumultuous Times

Intensified competition among wireless carriers is going hand-in-hand with more intensive competition among smartphone suppliers.

Smartphone, tablet and PC maker Lenovo completed its acquisition of Motorola Mobility and promised big things from the combination. LG Mobile Communications shipped a record-breaking 16.8 million smartphones in the third quarter, an increase of 39 percent compared with the year-ago period and up 16 percent from the previous quarter. And in a research report, Kantar Worldpanel Comtech said that in the U.S., “market competition has been reinvigorated with LG and Motorola increasing their shares.” The recently launched LG G3 and Motorola Moto X “are better positioned to compete with flagship products from Samsung and HTC,” Kantar said.

 At the same time, third-quarter smartphone shipments by Samsung, the world’s biggest smartphone maker, slid 8 percent to 78.1 million smartphones, with global share falling to 24 percent from a year-ago 33 percent. Though still on top in the third quarter, Samsung was alone among the top five handset vendors to post a sales decline, IDC said.

Samsung Mobile senior VP Kim Hyun-joon said the company “will fundamentally reform our product portfolio.”

Samsung’s Korean competitor posted opposite results. LG’s third-quarter shipments not only broke records, but sales of $4.14 billion and operating income of $163.16 million were the highest in the company’s history since 2009’s third quarter. “Building on its momentum and two consecutive profitable quarters, LG expects to strengthen its positioning in the smartphone market with its G Series and L Series III models despite the landscape becoming more competitive,” the company said.

One of those competitors is Lenovo and the Motorola Mobility business that it bought and plans to keep as a wholly-owned subsidiary, which will continue to offer Motorola-branded phones.

Lenovo chairman/CEO Yang Yuanqing said the acquisition will build “a strong No. 3 and a credible challenger to the top two in smartphones” and “give the market something it has needed: choice, competition and a new spark of innovation.”

Liu Jun, VP/president of Lenovo’s mobile business group, said Lenovo has “very aggressive plans to ramp up our [smartphone] business around the world.”

For consumers, the changes occurring in the handset business could deliver better handset choices, and for retailers and carriers, it could provide more leverage in price and marketing negotiations.