For the past year or so, LG Electronics has been working on transforming itself “Into a Smart Life Solution Company” under the leadership of its CEO, William Cho, who started his current role in 2021.
The term “Smart Life Solution Company” might sound nebulous at first but it contrasts with the recent past in which LG was one of the best at building individual appliances and other products but wasn’t yet able to create a network or platform effect that would magnify the customers’ user experience and branding power which would induce the growth the company wants.
The idea is to use LG’s extensive relationship with millions of customers who use hundreds of millions of devices to create better experiences and products at work, at home, or even inside vehicles. This may sound like an obvious thing to do, but it is hard for any company to achieve it at this scale. There are very successful platforms for computers or mobile devices, but they don’t extend to vehicles, buildings, and other infrastructures.
“SMART LIFE SOLUTION COMPANY”
This transformation is also a new mindset at LG. Many industry insiders have long recognized that the company was historically engineering-driven, which is why so many of its technologies were ground-breaking. However, one could argue that its brand power could (should) have been higher if the previous leadership had a more holistic approach.
Such branding and recognition are particularly important in product segments with a low refresh rate, like home appliances, televisions, air conditioning, etc. If one is going to make an “investment” in one every 7-10 years, buying from a perceived trustworthy brand and platform is a big part of the equation, perhaps even more so than high technical merits.
Better branding is very important, but it isn’t the endgame. By expending in many aspects of life (home, work, vehicles), LG intends to achieve a “Triple 7” plan, which consists in 7% cumulative average growth rate, 7% operating profit, and a 7x increase in enterprise value. This is a very ambitious goal.
I was recently invited to LG Korea to meet with their leadership and see/experience some of the progress of this endeavor. This included meeting key decision-makers in various fields, such as automotive, HVAC systems (home/work), and artificial intelligence (AI).
Home of the Future
We visited a “Home of the Future,” a realistic reproduction of a typical middle-class or upper-middle-class Korean apartment inside the LG Sciencepark in Gangseo-gu. LG Engineers use it to simulate real-world conditions or invite various groups in for usability testing or demonstration.
Inside, we were shown the latest LG products in action, emphasizing how smart or extremely convenient various home appliances were. For instance, some could recognize a family member’s voice and, from there, infer their height. The upper controls on a dual-stack washer/dryer are too high for one family member, so the machine would automatically re-route the dryer controls onto the washer at the bottom. Various software-enabled features of LG’s ThinQ UP appliances were upgraded over the air, and LG is emphasizing after-sale support for their products, which is important to end users.
There were all kinds of machine-learning applications from other appliances in which they learn about your habits, etc. It was standard for our day and age, but we could see where LG was going with it.
Affectionate (artificial) intelligence
We met with Han Eun-jung, vice president of LG’s AI Lab. No secrets were revealed, but it is obvious that LG is pursuing all the solutions that embedding models and large-language models (LLMs) offer, going from augmented-retrieval GenAI (RAG) to AI user agents that act on your behalf, saving you time. You can expect to see more “AI” looking applications that will feel much smarter than today’s machine-learning ones.
LG disclosed interesting numbers, such as its 700 billion hours of data usage across 700 million LG devices to train models. This is certainly a data treasure trove few companies can match in the industries LG is aiming for.
The company started working on this type of technology for more than a decade and even has dedicated chips originally introduced to run AI inference for high-throughput image processing.
“700 BILLION HOURS OF DATA USAGE ACROSS 700 MILLION LG DEVICES”
LG also mentioned that some of its models are proprietary, which makes sense since potential changes shouldn’t hinder such deployment at scale in terms of use or other legal issues from third-party models. LG also has a lot of proprietary data to train its models, which could be a competitive advantage in certain products.
LG’s overall AI effort aims to deliver “Affectionate Intelligence,” which I interpret as AI delivering real value that is perceptible and loved by users. Today, the electronics industry still has many “AI gimmicks,” but with LLMs and AI user agents, there’s great potential to explore.
A simple example I can think of is that no one should know what the various modes and knobs on a washing machine are. Ideally, the machine should be able to observe the laundry load and figure out the settings. Alternatively, the user can verbally request something specific, and that’s it. We’re not too far from this from a purely technical standpoint.
Vehicles & Mobility
At the worldwide LG headquarters, we had an insightful discussion with Valentin Janiaut, a Task Leader at LG Vehicle Component Solutions. For LG, vehicles are quickly becoming a “living space on wheels” that will transport people and serve as a home-like space in many situations. Therefore, every technology must be applied to make that space as comfortable and agreeable as possible.
Enter LG AlphaWare (αWare), LG’s software-defined vehicles software suite, composed of five core solutions recently presented at AutoTech: Detroit:
- PlayWare: Efficient and performance in-vehicle infotainment HD+AI audio and 4K video playback. LG can facilitate partnerships with major streaming industry players.
- MetaWare: Augmented reality for driving information that provides accurate and timely information and directions right onto the dashboard as an overlay.
- VisionWare: AI and ADAS (Advanced Driver Assistance Systems) platform analyzing driver and passenger behavior (seat belt usage, hand gestures, and kids presence)
- BaseWare: Enriches OEM’s vehicle operating systems. Supports real-time management and service abstraction. Includes Mixed Critical Orchestrator for managing service execution.
- OpsWare: Central operations platform for software developers. Enhances cybersecurity management and provides Cybersecurity-as-a-Service for continuous monitoring.
The software-defined vehicles industry and market are still extremely fluid, and there are different approaches led by various companies with diverging interests and points of view. LG is already a large player in the vehicle component market, offering a suite of products for cockpits, in-car connectivity, ADAS, and more.
However, the industry is held back by a lack of an established, standard (or dominant) software-defined vehicle (SDV). If successful, LG AlphaWare could unlock LG’s growth in that space and enable many carmakers. At the same time, it allows LG engineers to collaborate better, gathering technologies from all over the company (communications, HVAC, sensors, displays, etc.) to build a better in-vehicle experience. We look forward to seeing how this initiative grows and which partners LG will bring on board over time.
Enterprise (“Work”)
The Enterprise expansion plans were perhaps best represented by the HVAC products, where LG is doing very well because it owns the foundational HVAC building blocks: the compressors, heat pumps, exchangers, and motors.
Heat pumps are an extremely energy-efficient concept; instead of creating heat, the energy put into the heat pump is utilized to “move” heat around. One unit of electricity the heat pump uses can move several units of heat from inside to outside (air conditioning) or from outside to inside (home heating).
If you visit Korea, look around at various commercial spaces, airports, cafes, and stores you might visit. A whole lot of them use LG HVAC systems. It may not be the thing we talk about every day. Still, there’s a big demand for such systems, especially in growth areas where construction and temperatures are rising, namely India, Southeast Asia, and the Middle East. With energy prices increasing, every bit of efficiency matters, and LG seems poised to benefit from its technological position.
“LG SEEMS POISED TO BENEFIT FROM ITS TECHNOLOGICAL (HVAC) POSITION”
The HVAC industry has enormous potential to benefit from further energy efficiency and optimizations if the data gathered from millions of devices can be utilized to build AI models to control air conditioners and other parts of the HVAC infrastructure.
The Enterprise space can also involve manufacturing, and LG certainly has many technologies in that space. We saw them in action when visiting the LG Smart Park, a state-of-the-art, highly automated manufacturing facility that features three-dimensional logistics.
This means that appliances assembled on a floor are transported one floor above for Q&A and testing before being sent back to the assembly floor for packaging. Seeing large appliances being smoothly and quickly lifted and down was quite impressive.
Via its LG Smart Factory business, LG essentially provides the same type of capabilities to 3rd parties. As usual, with these visits, we were not allowed to take photos or film since an assembly line is highly secretive. However, there are a few official photos and videos to illustrate the location.
Brand initiative
Before anyone can experience new technology and potentially ground-breaking experiences, they need to have a “desire” to try (and hopefully buy), and that’s precisely what branding and marketing are for. This is crucial and has been neglected by LG in the past. Fortunately, the new leadership is taking a firm stance on this, which is a very positive sign.
First, we visited GROUND220, where anyone can experience various LG products in a fun and engaging environment. There are even “AI stations” where people can generate images using generative AI and then print T-shirts on site. The place doesn’t look like a store at all, and it’s somewhere one could go just to chill out for a bit. That said, there’s a store one floor below to satisfy any impulsive buying immediately.
The second stop was life.zip, a nice multi-floor pop-up store with various environments (outdoors, office, living room, kitchen, etc.) set up with the collaboration of famous designers, artists, and other personalities, sometimes featuring their personal memorabilia. It’s also a fun way to engage with the products without any pressure to buy anything.
What I gathered from these two experiences is that LG is playing a long game by planting an emotional seed that would grow when the end-user has a specific need down the road. Known for its “Life’s Good” motto, LG aims to make people feel good, even when that feeling is not associated with any particular product. Their “LG Electronics I Life’s Good When You Dive In Smile First” and “Optimism your feed” videos (below) are good examples of that
This commitment to a new direction might take LG several levels higher if the company achieves its “triple 7” objectives. It has been insightful to look at a snapshot of the progress and reactions to the first elements of this transformation, and we have much to look forward to in terms of products, experiences, and platforms. Can LG truly transform itself? It’s hard to predict the future, but this is promising and the best attempt to date.
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