iPhone 4 "Made in Korea?"

The Chosun Ilbo today carried an interesting short story entitled, "iPhone 4 Made in Korea."   In fact, amid all of the news reports of a titanic clash between Samsung's new Android phone and the iPhone, many of the most important components of the iPhone 4 are supplied by Korean companies.  The screen, which received a great deal of attention during the iPhone 4's unveiling recently in San Francisco, is manufactured by LG, which also makes the displays for Apple's iPad.  Samsung supplies the flash memory chip and the A4 CPU chip that powers the iPhone.  As if that weren't enough, the batteries in the new phone are manufactured by Samsung SDI, and it is equipped with multi-layer ceramic capacitors made by Samsung.  Smaller Korean companies are also involved.  Amotech supplies the varistors used in the phone, and Interflex produces the flexible printed circuit boards.

Google versus Naver in the Mobile Broadband Era

I read an interesting short article in Telecoms Korea today that confirmed my thinking.  To be specific, I thought that the introduction of the iPhone and Android-based phones in Korea would quickly begin to erode Naver's monopoly on web-based search here in Korea.  That appears to be what is happening.  According to the article "Although Naver is a leading search engine on the web, NHN has felt threatened from Google in conjunction with the expansion of Android-based smartphones in the local market. Google services, including mobile search, are offered by default on Android smartphones and the iPhone, and Google is gaining popularity with Korean mobile users and on the web."  Enough said. 

Status Report on Korea's "Smart Phone Revolution"

An article in the Joongang Daily today reports that the "Smart Phone Revolution" in Korea is finally starting.  It was accompanied by the graphic shown to the left (click on graphic to see a full-size version).   Last year only about two percent of consumers used smart phones, defined as those capable of accessing e-mail or the internet and performing functions much like a small hand-held computer.  This year the percentage of smart phone users has risen to 22 percent.
Expert predictions when the Apple iPhone was introduced have been shown to be way off target.  For example, experts predicted that 1.8 million smart phones would be sold in 2010.  Now the predicted figure is up to 5 million.
Not surprisingly, the introduction of smart phones has been accompanied by a boom in wireless data transmissions.  This is not surprising because most, although not all of the applications on the iPhone and other smart phones, rely on internet access.

Worldwide Trends in Sales of Mobile Devices

CNET has an interesting report on the trends in sales of smart phones over the past year.  Overall sales of mobile phones increased 17 percent year on year.  However, smart phones showed a 48.7 percent increase as 54.3 million units flew off the shelves.
The most interesting data in the report were in Table 2 (click on the graphic here to see a full size version).  Note that ONLY the iPhone and Android phones increased their market share year on year.  The report notes that the first quarter of this year was Apple's strongest yet, helped in part by overseas sales from mature regions, such as the U.K. but also in new markets such as China and South Korea.
Gartner's forecast for the near term suggests that the most successful companies will be the ones that control an integrated product in terms of operating system, hardware and services.  To stay competitive, manufacturers must integrate hardware, the user interface, the cloud and social networks to continue to attract customers.  Enough said. The challenge for Korean handset makers and mobile service providers should be apparent.

Korea's RFID Plan

According to the Ministry of Knowledge Economy, Korea will introduce high-tech identification tags on steel, electronic and pharmaceutical products as part of its ongoing effort to enhance overall inventory control of its businesses.    As reported in the Joongang Daily, the effort, which will receive 5.1 billion won ($4.5 million) in state support, aims to attach radio frequency identification tags (RFID) and build related sensor network systems to maintain real-time accurate monitoring on various products.

The ministry said Posco plans to use 2 million tags on its steel products and help set up related information technology infrastructure for 17 affiliates. LG Electronics said 860,000 tags will be used within the year on its flat-panel displays, while another 5.9 million may be used next year on monitors.  The latest support measures are part of a larger effort by Korea to become one of the top three industry leaders in RFID and related sensor networks. 

The "Smart-Phone Wars" in Korea

A recent article in The Korea Times notes that "smartphones may get more pricey."  Wireless carriers are worried that the governments attempt to limit their marketing expenses (see my previous post) could cool the smartphone boom by making the devices more expensive.  SK Telecom, the country's largest mobile-phone carrier with a 50-percent-plus share in subscribers, spent an amount equivalent to 27 percent of its revenue last year on marketing expenses, while the number was 33.5 percent for KT and 30.6 percent for LG Telecom, the smallest carrier.
HTC's recently released Desire, which is generating significant buzz among the handsets powered by the Google-backed Android operating system, is priced at around 900,000 won out of the factory. But SK Telecom's handset subsides have the phones sold to customers at around 300,000 won, although the exact price depends on the monthly data plans they choose.
The Korea Communications Commission (KCC) is reportedly considering adopting a ceiling for the handset subsidies, limiting the amount to around 250,000 to 270,000 won per device. 

South Korea to Cap Telecom' Marketing Costs

The Korea Communications Commission (KCC), South Korea's telecommunications regulator said on Thursday that it will limit the amount telecoms companies spend on marketing in a move aimed at cooling intense competition and boosting profits in one of the world's most saturated telecom markets.  As reported by The Wall Street Journal, the KCC said that the country's major mobile operators --including KT, SK Telecom, LG Telecom --should not spend more than 22% of their respective revenues from fixed-line and wireless businesses on marketing.   The regulator said it expects the move, which takes effect from May, to lower total marketing costs to 7.03 trillion won ($6.14 billion) this year, sharply down from 8.02 trillion won spent last year.
In order to ensure companies follow the guidelines, KCC said it will conduct an industry inspection in June and take strict action against companies that have spurred marketing competition by giving heavy subsidies on handsets or offering free gifts.
The introduction of Apple's iPhone last Fall, followed by the release of Android and other competing smartphones have contributed to the increased marketing costs.  In other words, the current intense competition is part and parcel of the so-called "iPhone effect" or "smart-phone shock" here.