Is LG Turning Its Back on Microsoft? (MSFT, GOOG, NOK, T)

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Some fast backpedaling by Korea’s LG Electronics has apparently stopped the claim by a Korean newspaper that the electronics giant is ditching Microsoft Corp. (NASDAQ: MSFT) and the US company’s Windows Phone products. The Inquirer, a Korean English language website, reported that LG would “get out of the Windows Phone market following sluggish sales of its Windows Phone powered handsets.”

The newspaper soon after posted an update statement from LG saying that the report was not true:

LG are still on board with Windows Phone, but right now, we’re focusing on Android because that’s where the demand is. Regardless of which OS, LG is committed to offering consumers as wide a choice as possible.

But the disclaimer does highlight a rather obvious point. The Android operating system from Google Inc. (NASDAQ: GOOG) is where LG intends to spend its time and money at least for now. In the original Inquirer reprort, an LG executive said, “The total unit [count] of Windows Phone sold in the global market is not a meaningful figure.” Ouch.

Microsoft, and hardware partner Nokia Corp. (NYSE: NOK) are trying to turn that situation around, most recently with the launch of Nokia’s Lumia 900 in the US at a price of $100 with a two-year contract from AT&T Inc. (NYSE: T). A new version of the operating system, Windows Phone 8, is due in late summer or early fall, and the Microsoft-Nokia duo is staking a lot on the success of that software.

LG currently has no plans to launch another Windows Phone-powered product soon. The company got on board with Microsoft in a big way in 2009 and launched several handsets that used the Windows Mobile platform. All were duds in the marketplace, and LG has posted operating losses for seven straight quarters, until sales of Android-based phones put the company back in the black in the fourth quarter of 2011.

LG’s snub of Microsoft shouldn’t have been unexpected, but the fact that it was done so publicly is not likely to sit well with CEO Steve Ballmer who is expected to visit Korea and LG later this month. Whether Windows Phone 8 and new hardware from Nokia can put Microsoft back into the mobile game was uncertain before and remains no less uncertain now.

Paul Ausick

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