Wednesday, June 10, 2009

Delaying the Inevitable: The iPhone No-Show in South Korea

It is interesting to see the local press reaction to Apple's recent unveiling of its newer, faster iPhone.  As reported in the Joongang Ilbo today, "one model is still missing in Korea's abundant cell-phone market, the iPhone."   This is the case even though the Korea Communications Commission eliminated the WIPI software requirement (barrier) in April of this year.  For years, there have been reports that both KTF and SK Telecom have been talking with Apple about introduction of the iPhone, but as yet no results.  Some Korean consumers are obviously eager to get their hands on an iPhone, as illustrated by the popularity of the iPod Touch, which is basically an iPhone without telephone capability.
So what is the problem?   According to press reports, it is that Apple has its own proprietary system of content and applications which would take business away from the content services of SK Telecom and KT.  The Joongang Ilbo article quotes a telecommunications analyst as being skeptical of the iPhone's success in Korea, saying that people have waited too long and that they've already bought the iPod Touch instead.    If you believe this line of reasoning, I have a bridge to sell you.   The delay in releasing the iPhone in the South Korean market, along with Android Phones and any other global competitors, will only hurt Korean consumers, handset manufacturers and ultimately companies like KT and SK Telecom.  Consider the following:

  • The iPhone is the best of a new generation of phones that clearly show how the mobile communications industry is entering a transition from phones to handheld computers and devices that also happen to handle voice telephony.  See my earlier post on "Korea's Stake in the Future of Mobile Broadband."
  • Consumers in Korea want mobile broadband for everything it will do, including web search, browsing, mobile internet games and so forth.  They do not want to be limited to the content SK Telecom or KT packages for them.
  • Yes, bring in the iPhone, Android phones and other smart-phone competitors will increase competition and take some content-business away from the large domestic telecoms service providers!    This is good and is what both industry leaders and the government should expedite.    One the whole, it will benefit Korea by making its companies more competitive in the global market.  
  • Given that the entire mobile industry worldwide is entering a seismic shift, South Korea today is only delaying the inevitable for short-term profit.    

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