Korean giant LG Electronics recently announced its intention to join the data center cooling business at its Investor’s Forum in Seoul. The company already has a sizeable heating, ventilation, and air-conditioning (HVAC) business, providing solutions for consumers, corporate, and industrial clients. Pivoting this business to cater to data centers would be much easier than starting from scratch, which puts LG in an excellent position to enter the data center cooling industry, primarily as its chiller business has grown 15% over the past three years, says The Register.
Nevertheless, the company isn’t content with using existing tech for its clients. Instead, it wants to dabble into liquid immersion cooling, which provides a more efficient way of cooling computer systems. LG even claims it has gained traction in its development, although it didn’t give a timeline for when its immersion cooling products would become available.
Some might say that getting into the data center cooling business is an intelligent move for LG. That’s because as AI computation increasingly becomes competitive, it would be difficult for a company to break into the industry where its competitors have already had a head start for many years. It’s like how Levi’s Jeans built its business during the gold rush; instead of looking for gold, it sold the tools and clothes the miners needed. So, the company was still in a good position even after the gold rush (or the AI rush) ended.
Subscription services bring home the bacon for LG
Aside from its plan to break into data center cooling, LG also touched on its progress on the 2030 Future Vision it launched last year. One of LG’s core businesses in South Korea, home appliances, has recently experienced a slump. Nevertheless, the company’s revenue remained positive because of its subscription services.
The company also calls them platform-based services. Alongside business-to-business sales and LG’s planned entry into new industries, the company aims to secure half its revenue and three-quarters of its profit from these three core areas. Even LG’s CEO, William Cho, refers to subscription services as the company’s cash cow, which helps it grow its other core businesses.
One way that LG plans to grow its subscriptions is by expanding content and ads. LG TV is one of the most popular TV brands in the world, and almost all of them use the webOS platform. The company is using this to boost its ad revenue and content business.
However, this massive growth comes at the expense of the consumer. With the world quickly moving towards a subscription-based model, ownership is slowly losing meaning. We hope that we don’t live in a time when you don’t own your vacuum cleaner; instead, you have a license to use it, and failure to pay the monthly fee means it will turn itself off, rendering your equipment useless.
