Thursday, November 11, 2010

LG and Samsung Struggle to Crack Smartphone Market

An IHT special report published in The New York Times yesterday was headlined "Korean Giants Struggle to Crack Smartphone Market."  It caught my eye and I read it with some expectation, but it was disappointing.  It failed, as many reports in the mainstream press do, to get to the heart of the reasons why Korea suffered the "iPhone shock" or "smartphone shock" beginning about a year ago.  As readers of this blog will know, I've been caught up with attempting to explain this phenomenon for a long time.  See this post, or another here, or simply search this blog for "smartphone shock" or "iPhone."
The story of why Korea's leading consumer electronics companies are struggling with the rapidly expanding smartphone market is more complex than the IHT special report makes it seem, and it involves the following elements.

  • Weakness in software and content versus hardware exports.  Smartphones themselves (the hardware) are not the key element in this wave that is sweeping the globe.  Rather it is the "apps" and the software ecosystem that count.   Not surprisingly, Google and Apple are major players.
  • Language -- As I've noted in earlier posts, Korea's heavy reliance on Naver for internet search casts into stark relief the importance of language and culture in any given market.  See my posts on Naver versus Google here or here  or do a search of this blog on the topic.
  • Non-tariff barriers -- The WIPI software platform adopted in Korea, while it may have originally had good intentions, eventually became a barrier to entry of the Blackberry or iPhone into South Korea's market.  I've done a number of earlier posts on this topic including this one.
  • Worry about loss of Voice Revenue--Korean telecoms executives, along with some of their European counterparts, feared a massive loss of mobile voice telephony revenues if they were to allow the iPhone and other smartphones into South Korea's market.  In fact, these fears were well grounded as Korean youth had flocked to buy Apple's iPod touch, on which many of them installed the free, Skype VOIP service.
The above are just a few of the points I wish that the IHT article, published in the New York Times, would have expanded upon.

No comments:

Post a Comment