Once Purchased, Lifetime New Products 'UP Appliances 2.0'... LG Electronics Unveils Vision for 100 Trillion Won 'Product to Service' Company

From Spec-Focused Products to Subscription Service Company Transformation
President Ryu Jae-cheol: "Transition to 'HaaS' Combining Subscription and Smart Home"

#Housewife A was worried about cleaning the refrigerator. It was cumbersome to take out the food and clean it. After purchasing LG Electronics UP (Up) home appliances, she eased her concerns. This was because a helper sent from LG Electronics' partnered online-to-offline (O2O) platform 'Daerijubu' cleaned it on her behalf. Even without buying a new refrigerator, by using Up appliance services such as cleaning and software upgrades, you can keep using your refrigerator as if it were new.

On the 25th, LG Electronics announced that it will change its business model from focusing mainly on home appliances to centering on 'smart home solutions' through 'Up Appliance 2.0.' This announcement came just two weeks after declaring the company vision to grow beyond a global home appliance manufacturer into a 'smart life solution company,' aiming to increase current sales of about 65 trillion KRW to 100 trillion KRW by 2030.

On the morning of the same day, LG Electronics unveiled the 'Up Appliance 2.0' strategy at LG Science Park in Magok, Gangseo-gu, Seoul. Key figures including President Ryu Jae-cheol, head of the H&A (Home Appliance & Air Solution) Business Division, attended.

President Ryu said at the press conference, "Up Appliance 2.0 is the starting point for expanding the home appliance business portfolio into a service-based business," adding, "We will challenge the transition of the home appliance industry trend to 'HaaS (Home as a Service).'" HaaS refers to subscription and smart home integrated services. It is a business that allows users to control appliances and save energy through the smart home platform 'LG ThinQ' app even when outside the home.

Up appliances are designed so that the software of existing purchased products can be freely upgraded simply by app operation. By upgrading the purchased product software through the ThinQ app, users can always use their appliances like new products. Up appliance service subscribers can add new functions to existing products by just pressing a button on the ThinQ app without buying new products.

External O2O services are also provided. For example, while traditional washing machines only wash clothes, Up Appliance washing machines offer dry cleaning and clothing storage services. Currently, six O2O services are available to choose from, including mobile contactless laundry (Laundriego), detergent (LG Household & Health Care) and dairy product (Milk Warehouse) subscription delivery, home cleaning and refrigerator organization (Daerijubu), item storage (Mini Warehouse Darak), and fresh food (The Banchan&).

LG Electronics said it pursues appliance 'hyper-personalization' so that customers can use products perfectly suited to them as soon as they are installed. Before product delivery, a three-step 'life pattern analysis' survey is conducted via the ThinQ app, followed by providing optimized functions. Customers can apply recommended modes or courses to the product with just one click.

The subscription business will also be strengthened. Customers can freely select usage periods and affiliated services. Usage periods can be set in units of 3, 4, 5, or 6 years. During the subscription application process, various product options and services can be selected, and product after-sales service (A/S) is provided free of charge. Monthly reports containing product usage analysis, recommended courses, and consumable information are provided through the ThinQ app. For example, when using the Up Appliance 2.0 air purifier in a new home, it identifies the level of formaldehyde, a substance that causes new house syndrome, and recommends a 'new house specialized filter' to the customer through the monthly report.

Ryu Jae-cheol, President of LG Electronics H&A (Home Appliance & Air Solution) Division, explaining about UP appliances.
[Photo by LG Electronics]

The Up Appliance 2.0 business is a must-succeed project to realize LG Electronics' vision of becoming a 100 trillion KRW company. Earlier on the 12th, LG Electronics CEO Cho Joo-wan pointed to 'servitization' as a turning point to watch in the process of realizing this vision. He emphasized that it is not enough to just make high-function products well; services must also be done well. LG Electronics stated, "Up Appliance 2.0 is the way to successfully respond to servitization."

LG Electronics said it aims to realize 'enhancing life value through liberation from housework' through the Up Appliance 2.0 business. The core is a home appliance-specialized artificial intelligence (AI) chip and operating system (OS). After more than three years of research and development (R&D), the smart appliance AI chip 'DQ-C' based appliance OS was installed in Up Appliance 2.0. This technology allows adding new product functions and deleting rarely used functions among the added features. On this day, LG Electronics applied the appliance OS for the first time to Up Appliance 2.0 washing machines and dryers.

LG Electronics plans to expand the lineup after launching four types of Up Appliance 2.0 products: washing machines, dryers, refrigerators, and air purifiers. Up Appliance 2.0 subscriptions can be applied for at LG Electronics' online brand shop. New products can be experienced at major stores nationwide, including LG Electronics Best Shop Seocho Main Branch and Geumcheon Main Branch.