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LG finally had some good news to report on the smartphone front, posting its first profit in the handset unit for almost two years.

After seven quarters of losses, the mobile phone division - still the third largest handset maker in the world, but suffering from a difficult transition to higher end models - turned in an operating profit of KRW12bn ($10.7m) in the fourth quarter of 2011. A consensus survey of analysts had expected a similar figure, but on the deficit side. The improved handset performance, and better than expected profits in the TV unit, helped narrow the overall net loss compared to that of Q410.

LG was slow to move away from its featurephone and CDMA strongholds into open smartphones, lagging its larger compatriot Samsung - itself not quick off the mark - by almost a year. Initially, the LG Optimus Android line-up mainly succeeded in the midmarket, where margins are slumping amid competition from ZTE, Huawei and others, but recently the vendor has been focusing on high impact hardware, including 3D screens. Chun Sung Hoon, an analyst at Hana Daetoo Securities, told Bloomberg: "With everyone using the same software platform, the competition comes down to hardware competitiveness, which LG is strong at."

The shift to high end devices, and away from mass market featurephones, was reflected in an 18% year-on-year fall in handset sales, to 17.7m units. There was no breakdown of smartphones and featurephones, though an estimate from Macquarie Group suggests it may have seen a 47% increase on Q410 smartphone volumes, to reach about 5.7m units or one-third of its total. Other analysts are more bullish - Strategy Analytics reckons it reached 54% growth.

That would still be less impressive than the figures at Samsung, which more than trebled smartphone sales year-on-year, or Apple, which doubled iPhone shipments. LG said last month that it had sold more than one million Optimus LTE units since its October debut.

A similar rebalancing of volume versus margin is already well underway at Motorola Mobility, Sony Ericsson and other vendors which have chosen to refocus on smartphones, leaving only the big two, Samsung and Nokia, still addressing the whole cellphone spectrum, though they are being chased by the full-range ambitions of the two Chinese majors.

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