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LG Believes In Modular Phones, But Will You?

LG's G5 smartphone is both a breakthrough and a head-scratcher. The modular design on LG’s latest flagship was exciting when the phone maker unveiled the device earlier this year. But after reviewing the LG G5, I was disappointed by the initial add-on options. Dubbed Friends by the Korean electronics giant, the accessories — which include a camera module and virtual reality goggles — are lacking in quantity and quality.

Considering the success Samsung is having with the Galaxy S7 and its breakthrough camera and HTC's solid comeback effort with the HTC 10, LG can't afford a misstep.

So what on earth is LG doing with its smartphone business, and can it keep up with its peers? To find out, I talked to Dr. Ramchan Woo, LG Electronics' vice president of smartphone product planning, as well as phone analysts that have some advice for the company.

Moving away from the screen

First of all, LG doesn't seem fazed by its competitors' success. "Starting with the G5, we look at competitors much less than before," Woo said. "This doesn't mean they're not cool," he continued. It's just that the company had already decided on a direction for the phone to make it "fun to play with."

"It seems like our direction is slightly different than the others," Woo added.

And that direction is crystal-clear. Woo said, "We want to help you experience something beyond the limited smartphone screen. … Our direction is to help people enjoy in the real world."

You might interpret that as an idea to somehow integrate LG’s phones with the Internet of Things, where all your devices are interconnected. Woo and his team didn't give me a direct answer as to whether that concept was part of the plan, but to clarify what Woo said, Frank Lee, director of LG's mobile communications and account marketing for the U.S., said that "being able to engage with your physical world and those relationships, rather than being limited on just the screen of the phone, that's what he was referring to."

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If LG really plans to further integrate its phones with the devices in a smart home, LG may have a solid chance at long-term success. "LG does have a strong strategic rationale to continue investing in smartphones, both to integrate with its extensive consumer electronics and appliances and to serve as a lead client for its components business," said Avi Greengart, research director for consumer platforms and devices at Current Analysis.

What about virtual reality?

One of the most obvious areas where LG is trailing its competitors right now is virtual reality. While Samsung has the successful Gear VR and HTC's Vive is getting rave reviews (although it isn't available for mobile devices yet), LG's answer to virtual reality has been lackluster. One of the G5’s Friends is a virtual-reality headset based on Google's Cardboard viewer. The $200 LG 360 VR headset not only lacks the immersive quality of its rivals, but also requires a wired connection that tethers you to your phone.

“We don't want people to look dumb with the VR." —Dr. Ramchan Woo, LG vice president of smartphone product planning

Woo is aware of these issues, and promises improvements. "We do realize we have lots of things that are not perfect yet. We have a clear roadmap to fix that," he said.

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On the plus side, the 4.11-ounce LG 360 VR looks sleeker than its bulky counterparts. That aesthetic was one of LG's primary concerns. "When I enjoy a VR head-mount unit, I really don't want to do it in the subway because I will look dumb. We don't want people to look dumb with the VR," Woo said.

Although Samsung and HTC have a definite head start in this realm, LG has some time to play catch-up. "VR is still very much in initial phases," said Ramon Llamas, research manager for wearables and mobile phones with market research firm IDC.

Stay tuned for more Friends

At launch, LG's innovative modular design didn't seem to be very well thought out. Of the Friends available, only the Cam Plus and the yet-to-be-released Hi-Fi DAC attach directly to the phone; other Friends are more like accessories you can link to via Bluetooth, Wi-Fi or a cable.

That might all change if LG is able to convince enough developers to create more Friends. Having already held two developer conferences in the last two months in San Francisco and South Korea with hundreds of developers in attendance, LG intends to encourage as many mobile developers as possible to expand the roster of Friends.

"I am skeptical of this strategy; with the possible exception of small power tools, consumers buy integrated products that best meet their needs, not modular products." —Avi Greengart

LG will also be involved in the creation of the modules. "Our idea is to work together with the third parties by helping them make prototypes and [through the] certification process," Woo said.

Hopefully, these new accessories will be more useful than LG's current roster of Friends. Right now, the Cam Plus module doesn't actually improve the phone's optics: it only adds a grip, battery boost and some dedicated camera buttons. The Rolling Bot is cute, but it's really a glorified security camera on wheels.

"LG is making a big bet that consumers are more interested in how they can expand a phone's capabilities than on design integrity," Current Analysis’ Greengart said. "I am skeptical of this strategy; with the possible exception of small power tools, consumers buy integrated products that best meet their needs, not modular products."

We'll likely see the outcome of LG's effort by the time of the next G-series launch, most likely next year. In the meantime, however, the company continues to work on its V line of smartphones. Last year's LG V10 was a powerful, sturdy device with a cool second-screen feature, and Woo said LG will launch a new one in the second half of 2016.

Simple is better

While LG works to expand its Friends lineup, rival phone makers are scoring some hits. As a result, it's going to be tough for LG to maintain its standing in the Android marketplace. IDC’s Llamas believes that Samsung and HTC have found success this year, "because they've dialed it back down to simplicity."

The G5’s modular design is intriguing, but it's also been confusing for the general public. "The modular approach has people kind of confused as to what's necessary and what's not," Llamas said. He has just three words for LG: "Keep it simple."

Trying to move beyond the smartphone screen and possibly turn it into a remote control for your home appliances is a smart idea. "LG's on the right track here," Llamas added. "I just challenge some of the timing and the execution."