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As Chinese brands grab the higher-end smartphone and TV businesses, LG and Samsung are fighting over next-gen appliances.
The Note 7 isn’t the only Samsung product with problems. The U.S. Consumer Product Safety Commission is also working with the Korean company to address safety issues with its washing machines. Customers who bought certain top-load Samsung washers should use only the delicate cycle for bulky items such as sheets to reduce the risk of “impact injuries or property damage,” the CPSC warned in late September following a series of consumer complaints, including a class action contending that Samsung’s machines “explode during normal use.” The company declined to comment.
What’s bad for Samsung may be good for homegrown rival LG, which has been promoting appliances loaded with the latest technology. In September the company unveiled a fridge with a 29-inch touchscreen powered by Intel equipment and running Windows 10; an onboard computer can store recipes and send alerts about needed ingredients to a mobile app. A few weeks later, LG set up an exhibition in New York’s Rockefeller Center to show off its current slate of high-end appliances, including a Signature fridge with doors that open when you wave a foot near a floor sensor. Tap the door twice, and a glass panel goes from opaque to transparent, revealing what’s inside.“This is just a start,” says William Cho, the company’s U.S. president. LG engineers are working to connect the smart appliances, along with motion sensors and the like, to a controller app called SmartThinQ. In September the company announced a version of the app that works with Amazon.com’s virtual assistant, Alexa, to manage appliances via voice commands. “In the next couple of years, you will see much stronger products combining technology and design,” Cho says.
Samsung has the early lead. Its $5,800 Wi-Fi-enabled refrigerator, introduced in January, lets users browse the internet, display photos, create grocery lists, and stream music from Pandora and other apps through built-in speakers. Samsung said in an e-mailed statement that its customers want connected appliances and it’s committed to them.
LG has a lot more at stake. TVs and appliances are just rounding errors in Samsung’s portfolio, which, despite the smartphone recall, has been buoyed by its chipmaking business. LG’s smartphone division has lost money for six straight quarters, and home appliances are its biggest bright spot, accounting for 35 percent of revenue last quarter.
It’s not clear that enough people want smart appliances to make the market a long-term strategy, says Jason Low, an analyst with researcher Canalys. Even if the high-tech equipment becomes more affordable, only so many consumers want a micron-sensitive air purifier or a fridge that plays music, he says. “They might think it’s complicating stuff, rather than making it easier.”
Still, LG and Samsung have to think long term. Chinese brands are gaining ground in the higher-end smartphone and TV businesses, and margins are shrinking. For now, next-gen appliances seem safer, says Mark Newman, a Sanford C. Bernstein analyst. “You have to claim the high end of the market,” he says. “They’ve got no choice.”
The bottom line: LG is pushing harder into pricey, gee-whiz appliances as its other businesses struggle to turn a profit.
At $8,500, the Signature fridge is a statement piece, part of LG’s growing effort to stake out the high-tech slice of the $381 billion global appliance market with new products. A $1,700 air purifier carries a sensor the company says can detect particles 1 micron in diameter, assessed on the device’s air-quality monitor. A $2,100 gas dryer can be programmed from a distance, using a phone and Wi-Fi. A two-unit washer ($2,880 total) can simultaneously handle two loads with different needs—whites and colors, for example.
