Mobile Broadband is the Future

There is some interesting news these days out of the recently concluded World Mobile Congress in Barcelona.  Samsung and the other major manufacturers of smart phones have announced plans to release cheaper smart-phones that will be accessible to the masses of users around the world.  This is hardly surprising since the general logic of the digital information revolution is that semiconductors, screens and other modular devices continue to become more powerful and cheaper over the long run.
Eric Schmidt of Google gave the keynote speech in Barcelona.  As he noted in a recent article for the Harvard Business Review, we are on the cusp of a big mobile revolution that requires three developments.

• Development and deployment of fast mobile networks for the future services.
• Development of mobile money, and
• Increasing the availability of inexpensive smart phones in the poorest parts of the world.

Emerging Growth Patterns in the Global "Smartphone" Market

The Independent recently carried two articles that are of interest to those following the global growth of the smartphone market, which is more aptly thought of as the worldwide transition to mobile broadband.  The first of these reports on data from a recent Gartner study showing that Google's Android system surged past Apple's iPhone and Canada's Blackberry in the third quarter of this year to become the second biggest smartphone platform, after Nokia's Symbian.  Based on third quarter sales, Nokia held a 36.6 percent market share, compared with 25.5 percent for Android, 16.7 percent for Apple and 14.8 percent for Blackberry.   Among other trends, smartphone sales grew 96 percent in the third quarter and accounted for 19.3 percent of overall mobile phone sales.  Nokia continued to be the leading handset manufacturer in the world, followed by Samsung and LG.  Samsung, according to Gartner, was the top Android seller in the third quarter, with sales of 6.6 million Android phones.
The second article of interest appeared last month, and relates to an earlier post on this blog.  It deals with the interesting relationship between Apple and Samsung as competitors yet partners in the global roll out of mobile broadband via smartphones.

Mobile Phone Subscribers Outnumber People in Korea

It finally happened.  The number of mobile phone subscribers in Korea now outnumbers the population.  This is a trend that arrived several years ago in some other countries which allowed a single individual to have multiple mobile subscriptions by swapping SIM cards.  As reported in the Chosun Ilbo, the number of subscribers to wireless communications services totaled 50.05 million as of September 8th, while the nation's population was estimated at 48.88 million.
With the arrival of smart phones, tablets and notebook PCs, the trend toward more than one mobile service is likely to continue.

Korea's First Half IT Exports Set a New Record

The Joongang Ilbo reports today that Korea's IT exports are at record-setting levels.  The graphic accompanying this post shows the recent pattern (click to see a full-size version).  Not surprisingly, semiconductors and flat panel displays are leading the export surge.   Exports of mobile handsets, a traditional Korean export strength during the feature-phone era, dropped 20.8 percent during the first six months of this year, due to a decline in export unit prices and a delay in smartphone production by Korean firms.
The regional pattern is also interesting.  Korea exported the most IT products to China, selling $33.1 billion worth of items in the country, followed by the European Union with $8.99 billion, and the United States at $8.49 billion.

Smartphones lead hike in high-end Imports

A short, but very interesting article in this morning's Joongang Daily is titled, "Smartphones lead hike in high-end imports."  According to the Korea Customs Service, imports of mobile phones surged by 149 percent last year to $137.04 million, largely due to smartphones.  The Apple iPhone, released in Korea late last year, was responsible for most of this effect, as 72 percent of the mobile phone imports occurred in the fourth quarter of last year.  Moreover, imports of mobile phones rose by another 369 percent in the first quarter of this year from the same period a year ago.
Growth in other high-end imports is shown in the accompanying graphic (click to see a full size version of the graphic).

More on the iPhone Shock in Korea's Mobile Sector

Evidence of the shock that the arrival of Apple's iPhone provided to the mobile communications market in Korea continues to accumulate.  As an article in The Korea Times today puts the question, it is "Can Samsung, LG Claw Way Out of iPhone Hole?"   (click on the graphic at left to see a full-size version) Of course, it is not only the iPhone hole, but in a real sense the Android one as well.  The major players in the mobile communications sector here, including service providers, handset manufacturers and the government, somehow managed to delay the arrival of the iPhone and Android phones in this market by approximately two and a half years.   As suggested in many prior posts on this blog, that delay arguably increased the system-wide shock to Korea's domestic mobile market.   Consumers had become accustomed to feature phones and to a heavy reliance on Korean-language only services.  Handsets like the iPhone and Android-based phones, because they bring the internet and location-based services to the palm of your hand, open up a whole new world of possibilities compared with the older feature-phones.  In the long run, this will be good for the Korean market and especially for consumers here.  In the short run it provides a shock!

Most Korean Handsets Manufactured Overseas

As reported in the Joongang Ilbo today, the number of Korean handsets manufactured outside of Korea now exceeds the number being manufactured domestically.  Last year 58 percent of the 354.8 million handsets that were shipped by Korean mobile phone manufacturers were made abroad, the first time that overseas production exceeded that of domestic production.  (see the accompanying graphic.  Click on it to view a full-size version)
Korean companies, led by Samsung and LG, have been increasing their overseas production to lower costs and increase production capacity.  Samsung, for example, is manufacturing handsets in China, Vietnam, India and Brazil, while LG is doing so in India and Brazil.
On a concluding note, the Apple iPhone 3GS I'm currently using is "Made in China."

Sales of Mobile Phones Sizzling

The Joongang Ilbo today notes that sales of mobile phones have been sizzling lately, largely due to a rise in consumer spending and increased sales of so-called smart phones.  According to the London-based research firm, Strategic Analytics, world mobile phone shipments stood at 324 million units in the fourth quarter of 2009, a ten percent increase over the same period in 2008.  As shown in the accompanying graphic, (click on graphic to see larger version) Nokia remains the market leader with a 38.1 percent share of the global market.  Samsung and LG together have a 30.6 percent share of the market, followed by Motorola with 4.9 percent and "other" manufacturers, including Apple with 20.1 percent.
A couple of things should be noted about these 2009 market share figures.  First, they represent the end of an old era in which feature phones dominated the mobile market.  Feature phones are those with certain features, such as the phones camera or music capability, are accented to appeal to different market segments.  The feature-phone era is ending and giving way to the new era of hand-held broadband internet computers, as discussed extensively in earlier posts on this blog.
Second, the figures and this graphic do not break out sales of either the Apple iPhone or Android devices.  These two categories promise to take up most of the global market share over the next five years or so.  It appears that the major challenge for LG, Samsung, Motorola and Symbian is to see how much of the Android market share they can occupy.
Third, mobile handsets are well on their way to becoming a commodity, just as happened with personal computers.  The key value in the global mobile market is in the software and applications.  What a person anywhere in the world can do with his or her mobile device will simply depend on the speed of the internet connection and the power of the Apple apps, Android apps, and ....we'll see what others might become competitive in the global market.

The Mobile Revolution: More on the iPhone Effect in Korea

As time passes, it becomes more and more apparent that the introduction of Apple's iPhone has sent shock waves through the mobile communications sector in South Korea, revealing some of its salient characteristics.  This phenomenon, the so-called "iPhone Effect" deserves a more thorough treatment than in my earlier post.  The following are some of my thoughts about the iPhone effect.

• The iPhone effect is occurring now only because leading industry and government players chose to ignore the implications of the transformation in mobile communications taking place around the world starting more than two and a half years ago with the introduction of the iPhone.  Neither the handset manufacturers, nor the mobile service providers, nor the government seemed very concerned about this until mid 2009.  The effect was that Korea continued to pursue an old model of mobile communication, based on feature-phones, while mobile broadband and "apps" were taking hold elsewhere in the world.
• It underscores Korea's relative weakness in the development of software and internet content, versus the manufacturing of hardware.  LG and Samsung Electronics together command a large share of the world market for mobile handsets, but are relatively weak in the so-called "smartphone" segment (I don't like this term, because the new phones, iPhone and Android, are really hand-computers or hand-broadband devices) show signs of being caught flat footed by the success of Apple's iPhone in the Korean marketplace.
• The iPhone effect also highlights the continuing high dependence on (or preference for) Korean language web content, as illustrated by high levels of usage of Naver, a Korean-language service, and relatively low levels of usage of Google.  The vast majority of the iPhone and Android apps being downloaded and used around the world are written in English or other languages.  The iPhone in Korea is exposing consumers to many of these applications, disclosing a clear "App-gap" with many of the most useful applications not yet available in Korean.
• The iPhone effect occurs partly because the Apple iPhone has introduced a multi-touch, capacitive touchscreen that is more than just screen technology.  It is a user-interface (UI) that everyone else is copying as we enter this new era of the handheld, internet-connected PC.  The iPhone is faster, easier to use and just a bit more intuitive than any of the competing phones on the market today, including Google's Nexus One and, most pointedly, Samsung's local T-Omnia II.  In this revolutionary era, the iPhone is setting the standard, much the way that the IBM PC did way back in 1980.

The revolutionary transition in mobile handsets from phones to internet-connected computers is well underway, both in Korea and globally.  Given the nature of semiconductors and other components that go into the handsets, it is clear that handsets will soon become a commodity, much like PCs are today, with more or less  modular, interchangeable parts.  The big money and the major impact of this transformation will be found in software and content.  Therein lies the future challenge for Korea.

Apple and Android in Korea in 2010

A headline from Telecoms Korea caught my eye this morning.   It proclaimed that "Six Out of Ten in Korea Willing to Buy Nexus One, If Released."  Nexus One, of course, is the new touch screen phone just unveiled by Google, which many have dubbed the "Google Phone."  The Telecoms Korea article cited a quick online poll by SmartphoneNow, a Korean-language web site.  Although the online survey is a decidedly non-scientific poll, 66 percent of a few hundred early respondents put the Nexus One first on their wish list, ahead of other Android phones soon to be released in Korea.  Now that the iPhone is selling better than almost anyone had projected, local research firms are projecting that Apple's iPhone and various Android models will provide healthy, if not overwhelming competition for Samsung Electronics Omnia Series.  This is illustrated by a market projection recently published in Telecoms Korea.  (Graphic at upper left--click to see full-size version.)

 The SmartphoneNow site also carried an interesting breakdown of major parts and their costs in the Nexus One (click on the graphic of the parts classification table in the lower left to see a full size version of the graphic). Like all "smartphones" these days, major components come from all around the world.  However, since Samsung Electronics contributes both the memory (at $20.40) and the mobile display (at $23.50), it ranks number one on this list in terms of the value of parts.  Qualcomm comes in second with parts worth $35.50.  So, if Nexus One does extremely well in Korea, taking market share away from Samsung Electronics own models, does that really hurt Samsung?
The information presented here simply confirms that Korea's mobile market is in the early stages of a complete transformation (I was going to say "upheaval,") with consequences for everyone, handset manufacturers, companies that make handset components, mobile service providers, and of course customers.  In a development that could really shake up Korea's market, Google is selling the phone directly over the internet via its own site, using a picture of the phone plus the headline and tagline "Nexus One -- Web Meets Phone."  That pretty much says it all, it is all about mobile broadband, with the content and applications it makes possible. If you clicked on the previous link, you'll see the notice "Sorry the Nexus One Phone is Not Available in your Country."  I wonder when it will be and which of Korea's mobile service providers will offer it.
The rapidity with which customers in Korea express a preference for Android-based phones, before they even arrive in the Korean market, is indeed interesting.   However, in one sense this is not at all surprising.  Korean customers are "tech-savvy" and easily capable of discerning that all phones will very soon be hand-held computers.  For Korea's mobile sector and its IT industry generally, the best strategy will be to open the marketplace up, not only for the Nexus One, but for all the new handsets, tablets and other devices that will emerge in the second decade of this century.  Doing so may mean hardships in the short term for some companies, but they will strengthen Korea's case to be one of the world's most important testbeds for cutting edge new technology.  Apple's iPhone and various Android models should do very well here this year!

Why the iPhone is Faster: Resistive versus Capacitive Touch Screens

Thanks to an informative article in the 전자신문 (etnews.co.kr) I now understand one major reason why I like my iPhone 3GS.   It is faster than my old Motorola Razr and even faster than other touch screen phones, like Samsung's T-Omnia.   There are two main types of touch screens used in today's mobile phones.  Resistive touch screens, used in most of Samsung's and LG's phones, depend upon the pressure of a finger, or a small stylus.   The capacitive touch screen used by the iPhone, on the other hand, uses the electro static field created by the human finger, allowing faster recognition than a resistive touch screen.  Capacitive touch screens also allow multi-touch functionality, such as using two fingers to enlarge the screen for better viewing of a map, picture or other document.
In a small computer or internet device like the iPhone, customers value speed. Speed matters, as I've touched on in earlier posts.  Now I know a bit about the technology underpinning this speed.   I'd only add that the capacitive touch screen also has a natural feel to it, in contrast to the more mechanical approach of the resistive touch screen, even with haptic effects added.

I'm officially an iPhone User: Some Initial Reactions

On Wednesday of this week I purchased an iPhone and stopped using my older Motorola Razr.  I had debated for weeks whether to wait and see what kind of Android handsets Samsung and LG would come out with next year.  Also, I knew that Motorola's Droid would be available in the Korean market early next year, probably in January.  However, I have no need whatsoever for the slide-out physical keyboard.  It strikes me as an appendage from an earlier age in the evolution of digital communication.  So, after two days of using the iPhone (3GS, 32 GB) here are some of my reactions.

• It is a handheld computer or PC, more than a phone.  There is no single "killer" application.  What makes it so wildly successful is that it brings broadband to your palm.
• The screen resolution is great.  I had debated waiting for one of the Samsung AMOLED screen-equipped Androids next year, but the iPhone display is so crisp and clear that I doubt I'll experience any buyer's remorse.
• The touch and multi-touch features on the iPhone are both designed for easy use.  All you need is a clean screen and dry fingers and you can rapidly move through screens, scroll and zoom using only your thumb or a single finger for the most part.  The user interface is elegant, with no extra steps and it is also largely intuitive.
• Synchronizing:   I was very pleasantly surprised at how fast I could synchronize my contacts, calendar, pictures and other information from my notebook to the iPhone.

The above are some personal reactions.  Using the device for a couple of days has also reinforced some of my thoughts about the Korean mobile market.

• I'll repeat my earlier prediction that millions, not hundreds of thousands of iPhones will be sold here in the next year or two.  It is a big hit with younger people and we already know that diffusion rates in Korea's closely knit culture can be extremely fast.
• Samsung, LG and the mobile service providers here need to take a close look at the overall impact and patterns of use of the iPhone, not as an Apple iPhone per se, but rather as a breakthrough device, similar to the first PC, and the first GUI or mouse.   A sea-change is taking place in mobile communications worldwide, and Korea has some catching-up to do.
•  In the past, Korea has shown its ability not only to catch-up, but then to go out in front of other countries in the ICT sector.  For the long run, don't underestimate what this country's leading companies may accomplish in mobile communications!

Apple iPhone Release Set for November 28th: Some Predictions for Korea's Mobile Broadband Market

Finally, after two and a half years of waiting for many people, Korea Telecom has announced release of the Apple iPhone in Korea.  On November 28, KT is planning to invite 1,000 customers who made online reservations to the Jamsil Basketball stadium for a launch event.  I've been posting on the topic of Korea's mobile communication market for some time now (just use the search feature in the right-hand column to search for "mobile")  Just for fun, I'll go out on a limb and make the following predictions about the forthcoming launch of the iPhone in Korea.

• It will be immediately and immensely popular here, selling millions, rather than tens or hundreds of thousands of sets with service contracts in the first year.  This is based on the established popularity of the iPod touch, which many bought as the best possible substitute for the non-existent iPhone.
• It will spark a mad rush by other mobile service providers and handset manufacturers to produce Android phones for the local Korean market.  The delay in getting Android handsets here is almost as embarrassing as the long delay in the arrival of the iPhone!
• The market for the iPhone, Android phones and competitors from Symbian will be heavily skewed toward younger people because they are (1)more broadband internet literate and (2) more fluent in English and other foreign langauges.  The market will, of course, most definitely include those of us in older demographics who use and appreciate the value of mobile broadband.
• The entry of iPhone, Android and others may help to shed light on the inherent weakness of South Korea's Microsoft monoculture, the subject of earlier posts.
• Finally, assuming that mobile broadband finally takes off here in Korea, as it has throughout North America, Europe and other parts of the world, this may wake people up to the extreme Korean-language dependence of the domestic Korean market.  Of course, Korean is the native language of residents here and will always be dominant.  However, if South Korea truly aspires to become a hub of any sort, it will need to adopt multiple languages, much in the way that Singapore or Hong Kong have, for different historical reasons.  The introduction of more foreign language broadband content and options here, starting with English, is not a threat but an opportunity for building a strong 21st Century information society in Korea.

Use of Chinese Mobile Communication Services in North Korea

An article in yesterday's English edition of the Chosun Ilbo outlined a new crackdown by the North Korean government on defectors.   It contained interesting detail on how the government places defectors into three categories, with the harshest punishment dealt to those  who had entered foreign embassies or taken similar action to get to South Korea, or who had converted to Christianity.  Of particular interest to me was the detail contained in the article about those found trying to use Chinese mobile phone services.  The article notes that they are subject to the level of punishment reserved for defectors and taken to the Chongori reeducation center in North Hamgyong Province, a center which has reportedly been reorganized to deliver harsh, concentration-camp approach to punishment.
Since 2003, when mobile telephone traffic increased in the areas near the North Korea-China border, China has built many signal towers there. As a result, communications, which had been possible only in some mountains near the border, is now possible in nearly all urban areas in North Korea including Sinuiju close to the border. But North Korea is cracking down on Chinese mobile phone carriers because they could help smuggle out information and encourage defection. It has reportedly recently launched an around-the-clock watch, providing all security guards in the border areas with portable radars. Any mobile phone carrier would see a security guard vehicle arrive immediately if they engaged in a phone conversation for more than five minutes, so they are safe to use phones if they do so in the mountains, where they do not need to worry about being caught by security guards.

Korea's Mobile Market Malaise

I've just returned to Korea from a one-week visit to Barcelona as noted in my earlier post.  As I catch up on some reading of tech articles, I cannot help but mention several developments that go a long way toward explaining the malaise in South Korea's mobile communications market.
A headline in The Korea Times a couple of days ago asks "Can Smartphones, Netbooks Save WiBro?"  The answer to this question is pretty obvious to those following the massive shift in the mobile market worldwide, away from phones per se and toward internet-enabled devices like the Apple iPhone, Android and other would-be competitors.  At least one company in China seems to understand what is going on as China Unicom, the country's second largest mobile operator, announced with Apple that it will launch the iPhone in China.  It is more than a little interesting that this comes before any Korean mobile operator announces a similar deal.  For details, check out The Financial Times article.
The answer to the Korea Times headline question is that phones like the iPhone, Android phones and the like can do a great deal to boost interest in WiBro.  Why?  Because they allow access to the entire internet at reasonable monthly rates.  Also because WiBro-equipped devices offer greater speed than 3-G connections to the internet.  Internet users around the world have proven many times over that they value the speed of their interconnection.   Simply put, when it comes to broadband, speed matters.
People in Korea should not be wondering so much why WiBro has not yet taken off here. The experience of the iPhone for over two years now in many other countries shows that (1) people want internet access, not a small, pre-packaged segment of the internet only in Korean or only in any other single language (2) they prefer faster rather than slow access via their mobile device and (3) that people find different applications very useful, including many types of geospatial and social networking applications.
Failure to realize the importance of the Google-backed Android and the iPhone have put the Korean market well behind (2+years) significant global trends.  The whole mobile communications market in South Korea will only emerge from the current malaise when one or two companies start offering internet services via the iPhone, Android phones and possibly other competitors.  Although the iPhone was first out of the starting block back in 2007, I think Android will give it a run for the money worldwide,including the South Korean market.  Comments welcome.

A Modest Mobile Communication Proposal for Korea

Today the Joongang Daily has an interesting article providing more background on why KT and SKT are delaying their decision on whether to import or not import the Apple iPhone.  I suggest that both companies, along with Samsung and LG Electronics, accept some basic realities and move forward.  Why not do the following:

• Immediately begin offering full internet access via existing 3G networks, with reasonable monthly charges for unlimited data (internet browsing) use.  Say in the range of 30,000 to 40,000 won.
• Equip most phone models, by default with WiFi capability, and as many as possible with WiBro.
• If Apple is driving too hard a bargain, come out with some snazzy Android phones.  This, even more than the iPhone, probably represents the future of mobile communication.  Furthermore, since it is open source, it offers far greater future rewards for Korean companies.
• Offer an easy toggle to English and other major international languages in your software for ALL future phones that you release.  Although foreigners and tourists may constitute a niche market, it is an important niche.

Given the huge stake that LG and Samsung, along with KT and SKT have in the global marketplace, I'm amazed that some of these things haven't already been done.  The basic reason for the popularity of the iPhone is that people realize they can now take the internet with them, wherever they go, 24/7.  Sooner or later, consumers in Korea will demand the same level of service currently provided in other countries.

Korea Times: "Closed Mobile Market Frustrates Consumers"

The headline of this article in the Korea Times says it all.  There has been a lot of local press coverage about the Apple iPhone (not yet available in Korea) and Android Phones (being launched by Samsung and LG in Europe and not yet available in Korea).  This latest article summarizes many of the points I've made in earlier posts.  I'd add the following considerations just to sharpen the point.

• it is becoming more than a little embarrassing for South Korea, a nation that touts its high levels of broadband internet access to actually deprive consumers here of mobile broadband access.  (I subscribe to SK Telecom's service but will NEVER use NATE.  Not only is Nate expensive, it doesn't even provide unfettered access to the internet! I'd like access to the internet via my handset.)
• Instead of protecting old-fashioned, Korean language only services, Korea should open up the mobile internet market.  Force Samsung, LG, KT and SK Telecom to compete here with the best the world has to offer.  This competition, over the long run, can only strengthen Korea's position in the global market.
• Now that handsets basically function like hand-held computers, it is natural that people want to use them as such.  This means that Korean corporations need to rapidly shift their focus to the production of software and content that young people today and future generations will want to use.  The handsets, like the PCs of old, will become commodities.  

Qualcomm Fined $208 Million

According to the Korea Times, the Korea Fair Trade Commission, this nation's anti-trust watchdog, has fined the U.S.-based company Qualcomm a record amount of $208 million for unfair business practices.  The Commisson said that the U.S. chipmaker had used its market dominance to maintain a virtual monopoly on CDMA-based phone chips.  Qualcomm owns critical key patents for CDMA, reaping huge profits from Samsung and LG Electronics.
What the Korea Times article neglects to mention is that Korea, back in the 1990s became the first nation in the world to commercialize CDMA technology.  This was accomplished through a partnership of Qualcomm and Korea's Electronics and Telecommunications Research Institute (ETRI).  As a result of the successful commercialization of CDMA in Korea, and its adoption by mobile service providers in the U.S. and other parts of the world, Korea's electronics companies began benefitting hugely from the export of CDMA handsets and mobile base stations.  As mobile telephony worldwide is transformed into mobile computing and internet access via the iPhone, Android phones and competitors, the latest versions of CDMA are likely to be even more important.  There is much more to say on this topic, but I'll conclude for now with one comment.  A lot of money is at stake here.    How much is Qualcomm entitled to and for how long for its intellectual property?  Comments are welcome.

Apple Bores a Big Hole in Korea's "Walled Garden"

As a short follow-up to my earlier post, there is an excellent treatment of the current situation at this link. Enjoy.

The Challenge for Korea's Mobile Telecoms Sector

Today many Korea-related blogs were filled with speculation that Korea Telecom was planning to introduce the Apple iPhone in Korea next month.  This was quickly dampened when a KT official apparently announced that there was no such plan.  However, the excitement generated points to the growing challenge faced by South Korea in its mobile telecommunications sector and, by extension, in the global marketplace.  As noted in earlier posts on this topic, several things are becoming clear:

• The mobile market worldwide is on the verge of a massive shift in emphasis from handsets to software and services, as epitomized by the Apple iPhone and Google's Android software platform.
• Korea's handset makers, led by Samsung Electronics and LG Electronics are major players in the global handset market, with much to gain or lose from the massive shift over to hand held computer/communication devices.
• As noted in a recent Reuters analysis, Korean mobile communications service providers have concentrated overwhelmingly on Korean-language services, which don't easily translate into the global market which demands English and other languages.

Samsung is reportedly planning to open up an App store later this year, but will it be a global app store, in competition with iPhone and especially Android applications?  It should be and my recommendation and hope would be that both Samsung and LG invest heavily in making the Android platform successful, here in Korea and around the world.  The rationale for quickly releasing a state-of-the-art Android phone capable of toggling between English and Korean seems obvious.  With some of the world's best mobile networks and the impending transition for some customers to WiBro, Korea is easily the world's largest national test-market for new mobile services and software.  Encouraging competition and innovation in that market is what will serve Korean handset manufacturers and telecommunications providers best in the long run and in an increasingly global marketplace.