LG Electronics Inc. (066570.SE) is reviewing plans to develop a TV set that will run on Google’s Inc.’s (GOOG) Android software as the South Korean company looks to join rivals like Sony Corp. and Samsung Electronics Co. in the growing market for web-connected TVs.
“Google TV could spark strong interest in the market, but the reason we are deliberating is because Google may one day dominate the software space and we don’t want to end up as just a hardware provider,” Simon Kang, chief executive of LG Electronics’ digital display division, told Dow Jones Newswires in a recent interview.
LG, the world’s second-largest liquid crystal display TV maker by sales after Samsung, launched Internet-connected TVs running on its own software called ‘Netcast’ earlier this year. The company is currently considering launching its own TV application store some time in early 2011, Kang said.
From early this year, LG launched its Internet-capable TVs in global markets, including Europe and North America, and has so far sold 470,000 units.
Market researcher iSuppli expects worldwide sales of web-connected TVs to rise to 87.6 million units by 2013 from 14.7 million in 2009.
Google and Japan’s Sony said in May that they will join hands to produce a television set that runs on the web search giant’s Android software called Google TV. Google TV includes a search box to help users navigate websites and TV programs from the living room. Samsung, the world’s biggest maker of flat-screen TVs by revenue, said last week it is also considering developing a television set using Google’s software.
A Google spokeswoman said it is looking at global TV manufacturers for partnerships for its Google TV, but it has no agreements beyond Sony currently.
Commenting on the overall outlook for the television industry, Kang said the market will likely slow down in the seasonally strong second half of the year because of a slowdown in the global economy.
“We previously thought that demand for TVs in the second half will be very strong, but as global economic conditions are worsening, this will impact the foreign-exchange rate and we may even have to raise our TV prices,” said Kang.
Kang also said the European crisis and high material costs, such as panels, have hit the company’s second-quarter earnings “relatively harder” than other global television makers since it has a bigger exposure to that market. He estimates the firm’s television division operating profit margin for the second quarter to come in at a “significantly” low-single digit compared with 3.5% posted in the first quarter. Still, the company targets a 14% share of the global LCD TV market this year and over 15% next year.
“Earnings will improve in the second half from the first half, but the improvement won’t be very significant,” Kang said.
Kang reiterated the company will sell 30 million flat-screen TVs this year, which includes 7 million LCD TVs with light-emitting-diode backlights, and 5 million plasma-display-panel sets. It is targeting sales of 1 million three-dimensional televisions this year, he said.