Why Korea Won’t Bite the Apple

South Korea is proud of its electronics makers and tech-savvy consumers. Samsung and LG won’t roll out the welcome mat for the new iPhone 3G

Despite the buzz generated by the June 9 unveiling of the first major makeover of Apple’s (AAPL) iPhone, there’s one place on the planet the U.S. brand isn’t likely to generate much buzz, at least in the near future: South Korea. The country is one of the most advanced mobile Internet markets in the world, and electronics companies have worked hard to make sure tech-savvy Korean consumers don’t fall for foreign brands.

This is a place where Nokia (NOK) is virtually absent. Google (GOOG) has struggled in Korea too. Its six-year-old Korean-language search service lags far behind market leader NHN. And while consumers in other countries have embraced the iPod, most Koreans are just not that into Steve Jobs and the work of his Apple designers. Many analysts say the iPhone 3G, the next-generation iPhone (BusinessWeek.com, 6/9/09) with faster Internet access that will sell for as low as $199 (half the current entry-level price), probably won’t do the trick either. “Apple can’t expect to be acclaimed as a premium brand in Korea,” says Thomas Kang at market researcher Strategic Analytics.

 

The big problem for Apple is simple. Koreans are more attracted to phones made by local consumer-electronics powerhouses Samsung Electronics and LG Electronics, both of which roll out scores of sleek multimedia handsets featuring leading-edge technologies every year. The Big Two together control nearly 80% of the Korean handset market.
Samsung’s Answer to the iPhone
Eager to play up their innovation bona fides, the Korean companies are determined not to take a back seat to Apple. For instance, less than 24 hours before Apple CEO Steve Jobs announced details of the new iPhone, Samsung unveiled a new touchscreen smartphone, called Samsung Omnia, its answer to the new iPhone. LG, for its part, last year actually beat the original iPhone by three months in the race to introduce a touchscreen model, (BusinessWeek.com, 5/1/08) offering the Prada phone, the outcome of LG’s joint efforts with the Italian fashion house.

Like the iPhone, Samsung’s Omnia works like a small handheld PC. It runs on Windows Mobile 6.1 and features Word, Excel, Powerpoint, and Opera 9.5 as its Web browser. It also sports a 16 GB memory, a five-megapixel camera with antishake technology, music and video players, 3G capability, Bluetooth, WiFi, an FM radio, and GPS functionality. It will go on sale in Southeast Asia later in June and in Europe in July, though pricing has yet to be announced. “Although the iPhone boasts intuitive user interface, it doesn’t really outshine Korean phones in functions and technologies,” says telecom analyst Yang Jong In at brokerage Korea Investment & Securities.
Special Software for Internet Access
LG is working on a slew of new smartphones too. In the past two years, LG has changed into a trendsetter (BusinessWeek.com, 5/8/08) from a second-tier phonemaker by launching models with a distinct look and feel. In April it rolled out the Secret, which used carbon fiber and tempered glass for the first time in a phone—a design meant to preserve the model’s sleek style from wear and tear.

It is also equipped with a five-megapixel camera, Movie Maker software enabling the user to mix music with videos, and a Google package allowing access to the Internet, Gmail, Google Maps, and YouTube videos.

Korea’s regulatory requirements could also discourage the iPhone’s debut in the market. To help smaller companies develop Internet-related applications at lower costs, the Seoul government in 2005 made it mandatory for all mobile-phonemakers and content providers to use a software standard for Internet access, called WIPI, or Wireless Internet Platform for Interoperability, in Korea. “I doubt Apple will be bothered to develop a new WIPI-enabled phone just for the Korean market,” says spokesman O Young Ho of KT Freetel, Korea’s second-largest mobile carrier, known as KTF, that is in talks with Apple to sell the new iPhone.
A Little Crack in the Armor?
Little wonder the three Korean operators aren’t in a hurry to forge a partnership with Apple. Both SK Telecom, the country’s largest wireless carrier, with a 50.5% market share, and LG Telecom (with 18%) have made it clear they have no plans to offer the iPhone. O says Apple is one of many phone manufacturers that KTF (with 31.5% share) is in contact with for its future handset lineup but admits there are big gaps in their negotiation terms.

Some industry-watchers bet KTF will eventually strike a deal with Apple, probably within a year. “KTF has been desperately trying to offer differentiated services to narrow its gap with SK, and the iPhone could be one option,” says Stan Jung, telecom analyst at brokerage Woori Investment & Securities. Meanwhile, the Korean government says it will review its policy requiring WIPI for all Internet-capable phones now that business environments have changed in the past three years.

source: Business Week

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6 comments on “Why Korea Won’t Bite the Apple

  1. If the Koreans are so tech savvy; then why did Apple kick their butts at computers, mp3 players and phones? I think they fear Amercian ingenuity & innovation more than we’d like to admit.

  2. Korea pushes back very hard against all sorts of imports. Not only by regulations (as mentioned in the article) but there is strong mind set and pride in Korean made goods. This has helped them become a wealthy nation quickly. To some extent people suffer by not being exposed to ideas and technology from around the world. This is ameliorated somewhat by a lot of copying or near-copying by domestic manufacturers. Hence the Prada and the Omnia. They look nice but they are stuck running windows. Lipstick on a pig.

  3. “LG, for its part, last year actually beat the original iPhone by three months in the race to introduce a touchscreen model, (BusinessWeek.com, 5/1/0 offering the Prada phone, the outcome of LG’s joint efforts with the Italian fashion house.”

    The Apple patents for the iPhone touch-screen interface first appeared in 2003, and were discussed line by line all over the Mac/Apple blogosphere. There can be no doubt that Nokia, Samsung, and LG also downloaded copies of these patents from the US Patent office website. All handset manufacturers have known what Apple was working on since 2003. I believe LG intentionally rushed the Prada into production so the CEO could claim the iPhone “copied” LG.

  4. Sebhelyesfarku, I think what you meant to say was Koreans don’t get the opportunity to buy overhyped crippled US crap. Big difference. Here in the US we get the opportunity to buy all the crap we want… I mean I’ve purchased plenty of Korean underhyped, uncrippled, poorly made, lasts about 3 months crap, that is so cheap I buy another one when that one breaks. But hey, who am I to say anything, I’ve still got a 7 year old iPod that is still kicking(more than I can say for my virtually disposable iRiver…)

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