Naver Complains of Google Monopoly in Smartphones!

NHN, the provider of South Korea's popular Naver search service, is unhappy with the smart phone market, where it claims rival Google is squeezing other companies out of business.  Samsung Electronics Android phones set Google as the default search engine, while Apple's iPhones use the Safari browser in which Google shows up by default.  NHN CEO Kim Sang-hun said it is "virtually impossible" for competitors to enter the market as only Google is connected.  "Users must be able to choose which search engines to use."   For the full story see today's Chosun Ilbo English edition.
I have commented extensively on Google's lack of success in the Korean market in earlier posts.  Naver does not really search the internet, but rather provides social information of value to Koreans, in the Korean language, and within what is essentially a Korean intra-net within the much, much larger internet.  I still stand by my earlier  arguments, but would only add that Google's services go well beyond search.   Google Earth (which is not available on the iPhone in Korea--why?), Google maps, Google Books and an array of other content and services are attractive to smart-phone users.  Over the past two and a half years, while Naver was building up its business within the Korean-language intranet with its Korean-language only service, Google was investing significantly in location-based services, and other services relating to books, scholarly documents, cloud-based applications, to name just a few.

MIT Researchers Create Molecular Chips

The news reported in The New York Times today that MIT researchers have created molecular chips should resound through Korea's semiconductor industry.  This development suggests that the growing power and decreasing size of semiconductors may continue to fuel the information revolution for some time to come.  The graphic accompanying the story (click on the graphic here to see a larger version) is an actual photograph of the molecular chip developed at MIT.  The researchers used a new technology called "copolymers" to allow chip manufacturers to take molecules and arrange them in complex patterns on silicon chips.

Korea's Microsoft Monoculture: The Problems of Active X

The introduction of Apple's iPhone has helped to highlight the problem posed by Korea's continued heavy reliance on Microsoft's Internet Explorer Web browser and corresponding heavy reliance on Active-X controls for online banking and financial transactions. (see the accompanying graphic--click the graphic to see full-size version)  As noted in a Joongang Daily article today, internet users in Korea waste an untold amount of time downloading and installing security programs that use Active-X controls.  It can take five to ten minutes to install such programs in order to access a banking page.  If a program is installed once a year on ten million PCs in Korea, that could amount to one million hours of lost work time, assuming ten minutes for installation.  Since Korea's minimum wage is 4,000 won, annual losses would total 4 billion won, in that example.
The Joongang Daily article does not even mention the fact that Active-X has been recognized as a web security risk for years and therefore is not widely used in other countries.  Now, the problem is compounded with the rapid introduction of "smart phone" devices, most of which use web browsers that are not compatible with Active-X.  Clearly, something has to give here, and it would appear that it will be use of Microsoft's web browser and its proprietary Active-X technology.  This will be good for Korean consumers and will put this country more in line with global trends.

Convergence: KT's Focus on Mobile Broadband

Korea Telecom seems to understand the profound change that is underway with the arrival of more powerful "smart" phones and is concentrating its efforts to enhance mobile broadband services.  As reported in today's Joongang Daily, the company will put its focus on "mobile broadband" in the coming months.  As the graphic here illustrates (click to see full-size graphic), KT is trying to usher in an era where people can easily access wireless broadband internet services from all kinds of devices.  KT will introduce a "tethering" service that allows Korean smartphone users to connect their handsets to other devices like laptops, e-book readers, connecting them to the internet like a modem.  Such a system would free smartphone users from the need to find a WiFi hotspot to connect their computers to the web.
These developments are all part of the continuing convergence toward a ubiquitous networked society.  In that future society, mobile handsets will play a key role as a convergence point.  That seems natural, since they are small, lightweight and always with a person.  Another important feature of mobile broadband in the future is that all devices, including the handset, notebook, desktop and television, will be synchronized or access the same data from the cloud.   I for one am looking forward to this.

Mobile Phone Communication with North Korea: Current Status

An article in today's Korea Times provides some very interesting specifics about how North Korean refugees in South Korea communicate with people in North Korea by mobile phone.  Seo, Jae-pyong, the Secretary-General of a group called North Korea Intellectuals Solidarity (NKIS) said that NKIS has run a news outlet service based on mobile phone conversations with secret correspondents in North Korea since 2008.  The purpose of this effort is to provide more information about the reclusive nation.  The NKIS provided the stringers with cell phones that have an international roaming service. International phone rates between South Korea and China are applied when North Koreans call NKIS people.  Although he declined to give information about how much the stringers are paid, the NKIS representative said that their allowances are high enough to feed their families.  He also said that "When we have conversations with people, especially from the border area between North Korea and China, we hear them as clearly as our phone conversations with our colleagues in South Korea."  Mr. Seo, an engineer, escaped from North Korea in 2001.  Out of approximately 20,000 North Korean refugees that have settled in South Korea from the 1990s, about 600 are college graduates.  About 300 of these educated people have joined NKIS to let people outside North Korea know more about it.
Seo also said that North Koreans can access the latest South Korean television dramas at home without much difficulty, despite the government's strict ban on the circulation of South Korean cultural products.   Two or three weeks after airing in the South, these dramas are copied onto CDs in China, and then these CDs are sold to distributors who deal with the North Koreans.

96 Percent of South Koreans Think Internet Access is a Fundamental Right

According to an international survey conducted by Globescan for the BBC World Service, 79 percent of adults around the world think of internet access as their fundamental right.  The percentage here in Korea is a world-leading 96%, compared to 94% in Mexico, and 87% in China.  78 percent of respondents worldwide felt the internet had brought them greater freedom, 90% thought it was a good place to learn, and 51% said they now enjoyed spending their spare time on social networking sites like Facebook or Myspace.  Despite this enthusiasm, the poll also showed concern, with many users cautious about speaking their minds online.  72% of Germans, 70% of Koreans, 69% of French and 65% of Japanese did not feel they could safely express their opinions online.  More than half of internet users worldwide (53%) agreed that "the internet should never be regulated by any level of government anywhere,"  including large majorities in Korea (83%), Nigeria (77%) and Mexico (72%).  The poll surveyed 27,973 adult citizens in 26 countries.

Number of iPhone Users in Korea Reaches 400,000

According to a KT Executive, as reported in today's Joongang Daily, there are now over 400,000 iPhone users in South Korea.  That amounts to an average of about 4,000 people a day who have purchased the device since it was introduced last November 28.  For those of you keeping track, that also amounts to an annual sales rate of nearly 1.5 million phones.   I feel vindicated about the prediction I made in an earlier post when all of the industry experts here were making lower estimates.
According to a demographics survey conducted by KT, half of the new iPhone users are in their 20s, 70 percent were men, and 30 percent came from the wealthier districts of Seoul.  This is only the beginning of the mobile transformation in Korea!

Korean Mobile Operators Prodded to Create Unified App Store

As reported by The Korea Times today, the Korea Communications Commission (KCC) is prodding the nation's three mobile telephony carriers to create a unified application store, to meet competition from Apple's iPhone.  Handset vendors Samsung Electronics and LG Electronics, which each run their own online applications store, will also be allowed a chance to join in the planned alliance between mobile carriers, the KCC said.
I encourage readers to take a close look at this article in The Korea Times.  In reading it, note that two subjects are not mentioned:

• One is the inherently global scope of the internet.  Does the KCC suggest that Korea's mobile carriers and handset manufacturers team up for success in the global market or only here in the domestic South Korean market?
• The second subject is the role of language in creation of internet applications and content.  Although progress is being made toward "machine translation," applications (apps) for the mobile internet still need to surmount language barriers.  Language is central to culture, and applications that may appeal to people within the bounds of Korean culture and language may still fail in Western or other markets around the globe.  Witness the failure to export Cyworld to the United States market, despite the fact that this social networking innovation arrived in Korea years before Facebook showed up in the U.S.

Part of Google's success is that it attempts to provide its applications in all of the world's languages.  I think Korean companies can mimic Google in this respect, to their great benefit.

Global Media Trends---Korean Media Trends

From April 19-22, Fulbright Korea will be hosting a U.S. State Department-sponsored Social, Mobile and Visual Media Workshop on "Advising in the Digital Age."  The workshop will be attended by fifteen Education USA advisors from around the Asian region with possibly some international involvement.  I've been asked to give a presentation on the opening day on the topic "Global Trends in New Media."  Today, while preparing for that presentation, I ran across the following video on YouTube of Google CEO Eric Schmidt's presentation at last month's Mobile World Congress in Barcelona.  Each of the major trends discussed by Eric Schmidt and his colleagues has direct and profound implications for Korea and its ICT sector.  Enjoy!

More on the "iPhone Effect" in South Korea's Telecoms Market

As time goes on, it is increasingly apparent that the introduction of Apple's iPhone provided a shocking jolt to South Korea's communications market, sometimes referred to in the press here as the "iPhone effect."  This has been the subject of previous posts here.
The full awareness of the transformation taking place in Korea's mobile market has still not sunk in at SK Telecom, which recently announced that it would not allow use of VOIP services such as Skype on its mobile phones.   In an earlier post I suggested that this would simply drive SK Telecom users to KT, which allows such services on its phones, including the Apple iPhone.  Today's Joongang Daily notes a report by Atlas Research that shows 46 percent of iPhone users switched to KT from one of the other two mobile service providers, and more than half of them from SKT.   This trend of customers switching from SKT and LG Telecom to KT is unlikely to stop until those companies offer Android-based phone services, with emphasis on the apps and content, that rival those of the KT's iPhone service.
South Korea's domestic market was caught off guard by the introduction of the iPhone and Android phones, even though even though its large electronics companies were manufacturing the latter for export long before their introduction here.  A full answer to the question of how and why the market here was caught off guard can shed a great deal of light on the strengths and weaknesses of South Korea's telecoms sector.

Korean Government to Set Up App Store

Why am I not surprised to read in The Korea Times that the Korean government is planning to set up an online app store?  One reason is an incident I vividly remember that occurred sometime last year.  My wife and I were waiting at a bus stop to catch the airport bus on one of our trips to the United States.  Right in front of us, a policeman stopped a black sedan that had made an illegal U-turn a few hundred yards up the street.  However, instead of pulling out a pad of paper to issue a ticket, the policeman punched some numbers into his mobile phone and showed it to the driver.  Within a few minutes the whole process of issuing a traffic ticket was finished, with absolutely no uncertainty about the identity of the driver and other relevant details.
In certain respects, South Korea is leading the world in e-government.  The Korea Times article reports that the government is now looking to set up a government "app store" to improve the distribution of public information such as weather forecasts, traffic updates and job openings.  An official from the Ministry of Public Administration said that the plan is to launch the app store as an internet site and then expand it to mobile platforms.  By allowing the public access to and use of public information the private sector will be given the means to create more value-added services.
It will be most interesting to see how the government's plans work out.

Forecast for Touch-Screen Mobile Phone Growth

Here in Korea, Samsung Electronics, LG Electronics and other companies are racing to develop advanced touch-screen technologies in the wake of the Apple iPhone's debut.  And they should be racing.
Back in December of last year, shortly after I had purchased my Apple iPhone 3GS, I wrote a post talking about capacitive versus resistive touch screens.  The capacitive touch screens, led by the iPhone are the ones most prized by consumers because of their speed and responsiveness.
Not surprisingly, the market for touch-screen mobile phones is projected to expand rapidly over the next several years.  A recent study by Displaybank (click to see a full size version of the accompanying graphic) suggests that one in four mobile phones will be touch-screen models by 2013.  I expect that most of these will be capacitive.  As the processor speed of these phones increases, along with improvements in the touch technology, they will give users a sense of wielding the power to instantly retrieve and manipulate vast amounts of information with simple taps, swipes and other gestures of the thumb and fingers.  These are indeed handheld computers, empowered by GPS, digital compass, other sensors and most importantly, high speed internet access.

SK Telecom Still Doesn't Get It: Smartphones and VOIP Services

It appears that the leadership of SK Telecom, South Korea's leading mobile service provider, have not yet comprehended what is happening to the mobile communications market here, and the implications for their business, both medium and long term.  As noted in the Joongang Daily, beginning next month SK Telecom will start charging customers for voice services on a per-second basis, rather than in 10-second increments.  This will make Korea the fifth country to have such a charging system and will save SK Telecom users an estimated $14.5 million every month.  However, at the same time SK Telecom announced that it would continue to block use of VOIP services on its smartphones!
What is even more remarkable than the announcement as reported in the Korea Herald,  is the company's reasoning that allowing its smartphone subscribers access to cheap internet calls using services like Skype will "deal a blow to its revenue."
One probable result of SK Telecom's policy, if indeed they stick with it, will be an increasing number of its customers who drop SK Telecom's service in favor of Korea Telecom.   That's what I did late last November and I haven't had a single regret.  Skype, by the way, was one of the first applications I loaded on my iPhone 3GS and it works great!
The leadership of Korea Telecom seems to have a better grasp of the revolutionary changes underway in mobile communications and greeted the SK announcement by saying that it would continue to focus on reducing mobile internet charges rather than on calling tariffs.  KT is also moving broadly to offer useful content and applications, which will no doubt generate handsome revenues.  SK Telecom would be wise to do the same, rather than cling to dwindling voice revenues as a source of future revenue.

More on the Microsoft Monoculture in Korea

The explosive transformation taking place in South Korea's mobile broadband market is creating ripples that go in all directions.  The local media and blogs are picking up on the fact that Korea's electronic transaction and internet banking regulations are causing inconvenience for users and businesses.  The current laws favor a sort of Microsoft monoculture, which has been the subject of earlier posts.
The Hankyoreh carried an excellent article on this topic a couple of days ago.   When I saw the drawing that accompanied the article, I just knew that this would require a post here.  It depicts Microsoft's ActiveX as a ball and chain restraining Korea's online market and online banking.  A great illustration with a powerful message!

Chipmakers to Battle in the Smartphone Market

The next big battle in the semiconductor industry, as described by an article in The New York Times today, is over chips for the coming generations of hand-held mobile devices.  As the article aptly begins, "The semiconductor industry has long been a game for titans."  The going rate for a state-of-the art chip fabrication factory is about $3 billion.  The plants typically take years to build and the microscopic size of chip circuitry makes for challenging engineering in order to keep up with Moore's Law.
The next phase of chip wars will focus on smartphones along with tablet and notebook sized devices.  Intel, which until now has had a very small presence in the smartphone market, is joining the fray.   The current market leader is ARM Holdings.  Global Foundries, a spinoff of Advanced Micro Devices, this year plans to start making chips at one of the most advanced factories ever built in Dresden, Germany.  Global Foundries has been helped by close to $10 billion in current and promised investments from the government of Abu Dhabi.
Other competitors in this industry include Taiwan Semiconductor Manufacturing, United Microelectronics and, of course, Samsung Electronics.

North Korea Reportedly Cracking Down on Cell Phone Use

The Eurasia Review and other sources are reporting, not surprisingly, that the North Korean government is again attempting to crack down on the use of Chinese cell phone services.  One recent defector from North Korea reported that the North Korean authorities were jamming cell phone signals and that it was practically impossible to make a call.  He said that "you can switch phone cards and the call appears to go through, but nobody in North Korea picks up."  North Korea also appears to have made overseas purchases of expensive cell phone tracking and jamming equipment which it has installed at various locations in Shinuiju, Hyesan, and Hweryong in the border area near China, according to North Koreans living in border areas as well as those in South Korea.

The Future of "Smartphone" Operating Systems

An article in the Joongang Daily today points to the obvious importance of operating systems in the rapidly changing "smart phone" market.  As shown in the accompanying graphic, the iPhone and Android phones are expected to gain market share over the next several years, at the expense of Symbian, Blackberry and Windows Mobile.  As the article notes, consumers are more and more likely to ask themselves, "Do I want an Android or a Windows Mobile?" rather than "Do I want a Samsung or Motorola?"  This observation is partly true, but what is really going to drive consumer decisions in the next several years is not the OS per se, but rather the information that is accessible and the power of the applications allowed with that OS and how the OS interacts with the applications.  To put it another way, if Google's array of online applications work equally well on an Android, iPhone or Symbian phone, then those three operating systems are going to share the market roughly equally.  It is the underlying content and information, rather than the OS itself, that will determine the power of these new handheld devices.  They are more than simply "smart phones," and they are also more than just a hand-held personal computer.  They are information machines that draw heavily upon mobile access to broadband internet, global positioning data, and live visual information (as in augmented reality applications like the iPhone's INeedCoffee app here in Korea).  It will indeed be interesting to see which OS prevails, but it would seem that in terms of applications that "organize the world's information" Google is way out in front.  That is why I would not be surprised if Android phones take up even more of the global market by 2012 than the graphic here (click to see full size graphic from Gartner) suggests, on the shoulders of Google's information services.

Multiple Screens: Digital Convergence Gathers Strength in Korea

Several articles in the newspapers this morning offer concrete evidence that the convergence of digital media in South Korea is strengthening and accelerating.   According to The Korea Times, both KT and SK Broadband are doubling their investment in IPTV this year from last year.  They also aim to double the number of IPTV subscribers this year, over the number in 2009.
Not surprisingly, The Korea Times report notes that IPTV is driving broadband usage and demand, particularly when it is bundled together with fixed line and mobile services.   In fact, SK Broadband in partnership with SK Telecom will promote a "three screen (TV, PC and Mobile) package to smartphone and IPTV users.  This reinforces a point made in my last post.  With convergence people will sometimes use a handset, sometimes a tablet, and sometimes a desktop PC, but increasingly they want the same content available at the touch of a finger on all the devices.
Three screens by no means represents the limit, since another new consumer trend is that people are putting the new flat screen television sets in more rooms of the house than just the family room or entertainment room, at least in Western countries.