Watch Out Nokia: LG Sells 1M Cheap Androids in 40 Days

LG today announced total sales of one million Optimus One smartphones, just 40 days after introducing the inexpensive handset in Asia, Europe and the U.S., reaching the million sales mark five days faster than Samsung’s Galaxy S. The high number of device sales in a relatively short time illustrates the growing challenge to handset companies that still sell the bulk of their devices in the low-end and feature phone segment.

Although the Optimus One is targeted at the first-time smartphone owner, it ships with the latest edition of Google Android (s goog), version 2.2 or “Froyo”, and is equipped with typical smartphone features such as a GPS chip, 3G and Wi-Fi radios, a capacitive touchscreen and a 3.2 megapixel camera. Keeping it out of the “high-end” smartphone market are limitations such as a relatively slower processor and lower resolution display, but in my hands-on review, I found the phone to be quite capable. When those limited features are paired with the generous battery, the Optimus One is an all-day smartphone.

Essentially, the device is several steps above a feature phone, but doesn’t require a huge investment for the hardware like an Apple iPhone (s aapl), Samsung Galaxy or a Nokia N8 (s nok), which can cost $199 or more with a data contract. The Optimus One I reviewed can be had for $30 at T-Mobile. Indeed, this past weekend, I saw the phone at no cost (with a data plan) in a sales flyer. While the full price of the Optimus One is roughly $230, that’s still far less than the higher end examples whose unsubsidized prices range between $549 and $599.

By selling 1 million Optimus Ones in such a short time, two things come to mind. First, the sales model: LG has taken a similar approach to that of Samsung, who as of last month, has sold 5 million Galaxy S handsets worldwide. Instead of creating a multitude of different smartphones, Samsung designed one truly solid device, which is rebadged and slightly tweaked for carriers around the world. (Related: our review of the Samsung Galaxy S for AT&T (s t) ). Doing so helps manage both production costs as well as expenses devoted to research and development.

Secondly, LG is wisely focusing on the first-time smartphone buyer at a time where feature phone sales growth is taking a back seat to smartphones. Compare this to Nokia, which still sells more handsets than any other company in the world, even though Apple and Research In Motion (s rimm) are catching up by selling only smartphones.  Yet, Nokia fans continue to shout a chorus of “Nokia owns the feature phone market and therefore, it will win in the smartphone market too.”

I don’t think such sentiments are a given when a company such as LG can quickly move a million low-end smartphones that run a modern operating system. With the entire smartphone market growing, there’s room for many hardware makers: Nokia, LG, Apple and the like. But the companies that can build a useful smartphone priced at a good value stand to gain many sales among the current billions of feature phone owners: especially in regions like India, where the next 500 million mobile web users are waiting for such affordable devices.

Related content from GigaOM Pro (subscription req’d):