Monday, July 14, 2008
No iPhone for Korea??
I'm watching South Korea and Apple's iPhone. Lots of reasons for it to be popular. The Apple designs are well liked. When I visit Seoul, Koreans techno-lust over my Apple MacBook Air and iPhone.
Nevertheless, unlike Japan, the iPhone may never surface in Korea. Here are some reasons.....
Despite reported attempts by KTF Co., the country's number two mobile carrier, to sell the handset here, South Korea was excluded from the 22 nations -- which include Japan, Germany and Spain -- where Apple announced last month it will release its third-generation (3G) iPhone on July 11.
South Korea was also not among the other 48 countries where the iPhone was expected to be released by the end of the year.
While South Korea's exclusion came as a surprise to tech-savvy consumers here, where more than 90 percent of the population owns a mobile phone, many analysts remained skeptical that Apple will attempt to tap the Korean market, which is currently dominated by Samsung Electronics Co. and LG Electronics Inc., the world's number two and number four mobile phone makers, respectively.
"Apple probably doesn't see the Korean market as lucrative due to the overwhelming presence of Samsung and LG," said Lee Seung-ho, an analyst at Goodmorning Shinhan Securities.
Samsung and LG together hold about 70 percent of the local handset market, with Samsung alone commanding nearly half of the total, according to the latest market reports.
Park Jung-hoon, a spokesperson for Apple Korea, declined to comment when asked whether South Korean consumers could expect to see the Internet-enabled mobile phone in the near future.
Despite the iPhone's hype, Samsung and LG have the technology and resources to produce a variety of models, which is a significant factor in maintaining a "competitive" market share, according to Lee.
Samsung and LG have both introduced handsets with functions similar to those of the iPhone, such as full Internet-browsing capabilities and intuitive touch-screen interfaces, during the first half of the year.
"If the iPhone is introduced here, is most likely to compete for Motorola Inc.'s slumping market share here," he added.
Lee Seung-hyuk, an analyst at Woori Investment & Securities, noted that the California-based company would probably have a very difficult time making an impact here by selling a single model.
"Companies realize that the average lifetime of a mobile phone in Korea is becoming shorter and shorter compared to other places," Lee said, adding that handset producers must continuously supply fresh models in order to survive in South Korea's near-saturated mobile market.
Chun Seong-hoon, an analyst from Hyundai Securities, noted a more glaring obstacle: an obligation for foreign companies to integrate WIPI, or wireless Internet platform, a unique software standard for South Korean handsets.
Under local rules, all internet-enabled mobile phones are required to carry WIPI, which global phone manufacturers complain is costly and time-consuming.
"Under the current rules, iPhones sold in Korea would be required to have WIPI, which is an unfavorable factor for Apple," Chun said.
While demand for the iPhone in Korea does exist among loyal followers of the Apple brand, it remains marginal within the overall market, according to Chun.
Ahead of the release of the 3G iPhone in other countries, Samsung and LG generally welcomed the launch of the iPhone while forecasting that the product would have a tough time if released here.
James Chung, a spokesperson at Samsung, said during a telephone interview that the international release of the iPhone could serve as a catalyst to expand the overall market. He added that Samsung is prepared for the added competition.
Choi Jun-hyuk, a spokesperson at LG, noted that the iPhone would have difficulty if it is released here because there is not a big market for "smart phones," or handsets with computer-like capacities.
"South Korea's smart phone market is very small and will need some time to increase into a full-scale market," he said.