"South Korea's Smart Phone Love Affair Lures Foreign Suitors": More to the Story

I was reading the paper edition of the International Herald Tribune on an Air Canada flight to Vancouver B.C. yesterday when I ran across the Reuters story "South Korea's Smart Phone Love Affair Lures Foreign Suitors."  As mainstream international journalism goes, it was quite a good report, but it suffers from the same weaknesses that characterize most such reporting about Korea, and about its remarkable ICT sector in particular.  They include a lack of historical perspective and a shortage of data or evidence-based analysis.
First, the Reuters analysis notes that the number of smartphone subscribers in South Korea has exploded more than ten-fold to top 10 million in just 18 months, now accounting for around a fifth of the population. However, the analysis fails to note the most obvious reason for this rapid growth, the fact that development of the smartphone market in South Korea was delayed for about two and one half years by strategic corporate decisions and legal requirements. Indeed, the two and a half years preceding entry of Apple's iPhone into the South Korean market at the end of 2009 provide an extremely informative picture of how government, the major mobile service providers and Korea's handset manufacturers, led by Samsung and LG, approached the situation. The Reuters analysis, while not inaccurate per se, simply fails to provide some of this essential historical perspective.
Second,quoting a Seoul-based industry source, the report notes that smart phones have become a “Trojan horse into the Korean market” for the likes of Google and Facebook, which had a head start on local firms in optimising their offerings for smart phones. This is an insightful point, but again, the Reuters article does not go on to address the question of why the Trojan horse metaphor should apply to Korea in 2010 and 2011. The article mentions the dominance of companies like Daum, Naver and SK Communications in the South Korean market and the PC-based approach in Korea, but stops short of explaining the main reasons for this. These include both the role of language in shaping patterns of internet use and South Korea's half-decade or more lead on the U.S. and other western countries in building its fiber-based information superhighways. These two factors are keys to the dominance of Naver in search and the market leadership of Cyworld in social networking, although simple one to one comparisons of Naver to Google or Cyworld to Facebook and other social networking services are not realistic.
There is much more to all of this than can be conveyed in a blog post.  However, I could not let the interesting Reuters news analysis pass without some comment, since it touches directly on issues treated at some length in my new book, co-authored with Dr. Myung Oh, Digital Development in Korea:  Building an Information Society (Routledge, March 2011).  Those of you interested in delving further into the issues touched upon here will want to read portions that book.

LG to Increase Patent Experts for "Patent War"

As reported by Displaybank, LG Electronics has announced that it will increase the number of its patent professionals by 30% over the current number of 200 by 2013.  It is doing so in order to protect intellectual property in the U.S., China and Europe.   The article contains some interesting detail on LG's strategy.
In a broader context, some industry estimates are that as much as 80 percent of the global ICT market consists of software and content, with the other 20 percent consisting of hardware.   Despite the remarkable developments in hardware, including electronic devices of all sorts and more powerful digital networks, the information content and communication between human beings is still the most salient aspect of the emerging information age.  This means that intellectual property in general, a subset of which consists of patents, will become more and more important.

Korea Continues to Dominate the Global Television Industry

Exports of television sets continue to thrive in the information age, and South Korean companies are a dominant force in the world market.   According to The Korea Herald, about a third of all television sets sold around the world in the first quarter of 2011 were manufactured by Korean companies.  (See the accompanying graphic---click to see full size version.)  Furthermore, Samsung and LG both saw year-on-year markets share increases, while the shares of their Japanese competitors decreased slightly.

Samsung's Dominance in the Display Industry

The proliferation of displays of all sizes is one of the salient features of the emerging 21st century information age.  Mobile displays are a particularly important feature of this development, as smartphones become increasingly cheaper, more powerful and popular all around the world.  The accompanying illustration (click to see a full-size version) shows a flexible active matrix organic light-emitting diode (AM-OLED) display that Samsung sees as a major growth engine.  As reported in The Korea Times, Samsung Mobile Display (SMD)  was launched in January 2009 with an aim to lead the market in next-generation flat-screens (OLED) as Samsung was seeking breakthroughs in that area. SMD is dominating global demand for AM-OLED, which requires less power and provides clearer picture quality and a much faster response time than existing LCD displays. OLED screens are used in smartphones and other portable devices and SMD controls over 80 percent of the market, as shown in the graphic below. (click to see a full-size version)

The Forthcoming "Big Bang" in Korean Mobile Game Market

As reported in the Joongang Daily, the growth of the mobile game business in Korea has been notably slow despite the explosive popularity in the use of smartphones. One of the main culprits has been strict government censorship. In Korea, games must be reviewed and rated by the Games Ratings Board before they become available on the market.  This situation caused Apple and Google, which operate the App Store and the Android Market, to close their game categories for Korean users.
The situation may be about to change, as the "Open Market" law passed by the National Assembly in March is going to take effect in July.   Industry experts expect Apple and Google to reopen the "Game" category once the new law goes into effect and leading industry players in South Korea are reportedly ready for this event.   The attached graphic (click to see full size version) shows the expected growth of Korea's mobile game market, without factoring in a return to the market by Apple and Google.

"Haves" and "Have-Nots" in Korea's Smartphone Era

Right up until 1980, basic telephone service in South Korea was considered a luxury and the lack of adequate telephone networks had created a major social crisis in the country.  However, beginning in 1980, the country instituted changes designed to build modern networks.   From the very beginning, these networks were considered incomplete until they were equally available to all citizens nationwide, reaching the most remote farming and fishing villages in the nation.   This emphasis on universal service, from the start of construction on Korea's digital networks, is described in detail by Dr. OH, Myung and me in our new book, Digital Development in Korea:  Building an Information Society (Routledge, March 2011).
South Korea's experience with the utter lack of phone service during the 1970s may explain partly why it worked so hard for so long and invested so much to build the worlds most extensive and fastest digital networks.   This meant that, while the debate about "network neutrality" flourished in the U.S. and Europe, not much was heard here in South Korea.  Until the end of 2009, when the Apple iPhone finally arrived, there was an excess of network capacity and major industry players were concerned about how to increase use of data services!
This background explains why I read with great interest the Joongang Daily's article entitled "Haves and have-nots in the Smart Phone Era."  As shown in the accompanying graphic, (click to see full size version) ownership of smartphones in Korea currently has a great deal to do with level of education, financial status and residence location.  This information is based on a 2010 survey, but it is sure to cause concern among senior policymakers here in South Korea.  However, the problem may soon be ameliorated by the rapidly decreasing cost and increasing power of the so-called smart phones.  In the near future, it may be that "haves" and "have-nots" will be distinguished by the cost of the mobile broadband services they can afford, rather than simply smart phone ownership. 

Yonsei Architecture Students Credit the Internet for Win in International Competition

As reported in the Joongang Daily, four Yonsei University architecture students won the grand prize in an international landscape architecture competition organized by the National University of Columbia.  The competition was to design a museum for the city of Medellin, considered the second most important city in Columbia. The students, who had never been anywhere near Colombia, used the Internet and satellite maps such as Google Earth to learn about the city’s history and culture as well as understand the landscape of the city and its geographical features. “We were able to overcome the limitation of not being able to visit the city in person by using the Internet,” Kim said, adding that “the fact that none of us had visited the place stimulated our curiosity.”

Private Study Abroad Agencies (유학원들) in South Korea

Over the past several decades, private study abroad agencies have come to play a dominant role in South Korea's education sector.   The majority of Korean students interested in study abroad, often with their parents, employ the services of a study abroad agency to help find a suitable program, prepare for it, and apply for admission.  This pattern persists despite the fact that the activities of study abroad agencies are controversial, both here in South Korea, and in the United States, which is still the single largest destination for Korean students who study abroad.
The source of the controversy about study abroad agencies is succinctly described in a recent article in The Japan Times by Liz Reisberg and Philip G. Altbach of the Center for International Higher Education at Boston University.  In it, they note that "The primary client for agents is the institution that hires them. In order to be successful, they must deliver an acceptable number of students to their sponsoring institutions. Of concern is their activities, source of their fees, propriety of their services and transparency, particularly to students. Many universities suspect that agents sometimes complete applications and write essays for their student clients."
Because most private study abroad agencies accept commissions from schools for delivering student applicants, it is nearly impossible for many of them to provide comprehensive and impartial information about the full range of educational opportunities available in the United States, which is home to by far the largest and most diverse education sector in the world.  Partly for this reason, the U.S. State Department-affiliated network of more than 400 EducationUSA advising centers around the world  all subscribe to a code of ethics in student advising that prohibits them from certain types of work with study abroad agencies.
It should be noted that study abroad agencies in Korea have served a very useful purpose by translating the largely English language materials of U.S. colleges and universities into Korean and interpreting the sometimes complex cluster of admissions tests, essays and other requirements for the prospective students and their parents.  This is a need that will continue, even with continued development of the internet and mobile, digital media networks.   However, as Reisberg and Altbach note, there are alternatives to the private recruitment agents.
The digital information revolution makes possible direct, audio-visual and interactive communication between U.S. schools and prospective students not only in Korea, but throughout Asia.  The emergence of virtual events such as CollegeWeekLive in the United States have broad implications for how U.S. study abroad programs recruit students in Asia.   I will be commenting on some of these in future posts. Comments on the above issues are welcome.

Why the Rise of Tablets?

Interesting article in the Chosun Ilbo English edition today, entitled "PC Market Stung by Rise of Tablets."  Indeed, the rise of tablets, not only in the South Korean market, but globally, is not at all surprising.  The reason for this is simply that, all other things equal, human beings prefer a mobile device, untethered by wires, to the old fashioned, wired desktop computers.  This is expressed succinctly in the so-called "Law of Mobility" or "McGuire's Law."
Having said this much, South Korea presents a special case in point.   I believe that Koreans are, culturally speaking, much more mobile than, for example, Americans.  Here I mean mobile in the sense of the percent of their average day spent outside the home.  I have no empirical data to present on this, but would appreciate observations.   Those of you who have ventured into the central district of most American cities after working hours might think of comparing that to any of Korea's cities when work in the office is finished.  Or, as the accompanying illustration (click to see full size version) shows, consider the average commute via public transportation in Korea versus commuting in a private vehicle in North America.  Comments welcome.

World Leaders See Increasing Role of Technology in Education

I just ran across the results of the survey sponsored by Cisco, released in March, which show that three quarters of top education officials around the world believe that technology can play a major role in how students learn and how teachers education.  Perhaps you may think this is an unsurprising result, especially given that the survey of 500 administrators in fourteen countries was sponsored by Cisco.   However, I suspect that a survey sponsored by Google, Apple, Samsung or LG would have produced similar results.  The revolutionary developments in broadband, both fixed and mobile, that these companies and others are leading, have already transformed libraries, lectures and learning the world over.  Think Google Books, MIT Open Courseware, or the Mobile Learning Program introduced at Abilene Christian University a few years back with the introduction of the iPhone.  These are but a few examples.

Rural Boarding School Educational Model Introduced in Korea

The Hankyoreh has an interesting story on the recent establishment of a rural boarding school in North Chungcheong Province.  Students accepted into the school live there in dormitories from the time the bus arrives on Monday morning until the Friday afternoon bus leaves to take them to their homes.  The school is a collaborative effort of the North Chungcheong Province Office of Education, residents of farming communities, and students parents.   It represents an effort to introduce educational diversity and opportunities to children in rural areas.   What caught my eye in the story was the example of one student living in rural North Chungcheong Province who had moved there from Daejon in the third grade.  He was unaccustomed to rural life and consequently spent seven to eight hours a day on the internet playing games!  The article provides an interesting glimpse of the educational challenges faced in rural Korea today and how they are being met.

Seoul Police Raid Google Korea's Offices

The global controversy over collection and use of location data from Apple and Android smartphones has taken a new turn in Korea.   The media today, including both the Chosun Ilbo and the Joongang Daily, are reporting that the Seoul Metropolitan Police raided Google Korea's offices in Yeoksam-dong. (click on the accompanying graphic to see a full size version)
According to the Chosun Ilbo account, Police said members of their cyber unit conducted the raid Tuesday. They carried away hard drives and other equipment related to Google's AdMob unit, which is suspected of collecting personal location information without authority or permission.The probe is not directly related to a previous investigation of Google in Korea. That probe concerned the incidental collection of personal data while Google cars were cruising through neighborhoods and taking photographs for the company's Street View service.

Some Data on Mobile Data Use in Korea

The Joongang Daily, in an article entitled "Telecom Data Use Booming," provides some data to show the increase in mobile data usage with the arrival in Korea of smartphones. (click on the accompanying graphic to see a full-size version)  As the article notes, users of tablet devices use more data services than users of smart phones, probably about two times as much.

Google Under Scrutiny in Korea

Even in this information age, the major nations and cultures of East Asia often seem inscrutable to the mainstream western press. Since mid-April, the international media, led by business writers and technology blogs have been abuzz with news from South Korea. There, two leading internet portals, Naver and Daum, had lodged a complaint against Google with the Korea Fair Trade Commission, the nation’s competition and antitrust regulator. They alleged that Google unfairly used its status in the mobile industry to make it difficult or impossible for competing search services to be installed on Android devices in Korea. By forming a marketing partnership with major smartphone producers, so the complaint reasoned, Google had unfairly created a new ecosystem in which the Android system was offered free as a way to control the market.Furthermore, Google’s 15-20 percent share of Korea’s mobile search market could not possibly reflect the free choices of mobile carriers and manufacturers since Google controls only a small single-digit share of fixed line internet search in Korea. Google responded to the complaint with a statement that “carrier partners are free to decide which applications and services to include on their Android phones.” However, as widely reported thus far, news of the complaint against Google in South Korea fits into a familiar and most plausible story line. Many reports have explicitly linked Korean developments to the investigation of Google launched last year by the European Commission, and the complaint filed earlier this year by Microsoft. While this story line may be accurate, as far as it goes, it does not go far enough. The developments in Korea deserve closer scrutiny with a bit more historical and cultural context. The following elements should be added to the story to more adequately understand what is occurring with the complaint against Google. First, an acknowledgement that South Korea led the world in constructing nationwide, fast, fiber-optic broadband internet networks. When U.S. Vice President Al Gore spoke in 1994 of the need for an “information superhighway”, Korea acted the following year by implementing its ambitious Korea Information Infrastructure (KII) plan. By 1999, the year Naver was launched, PC Rooms had spread throughout Korea and with them such popular multi-player online games as World of Warcraft. The Korean social networking service Cyworld also debuted that year, half a decade before Facebook was invented! Second, while Naver is unquestionably Korea’s most popular internet portal, it is not at all an internet search engine like Google. Naver’s most popular feature, called “Knowledge-in” allows Koreans to input questions that are then answered by other Koreans online. Moreover, regular searches on Naver return pages on which paid advertisements top the results. When compared with Google, Naver appears as a large, Korean-language intranet with social networking and collective intelligence capabilities, rather than a comprehensive internet search tool. Its success underscores the centrality of language to web-surfing behavior. Third, although much of the international reporting mentions the rapid diffusion of smartphones in South Korea, with over ten million currently in use, some relevant history is generally ignored. Although introduced in the U.S. in mid-2007, Apple’s iPhone did not reach the South Korean market until two and a half years later! The combined interests of Korea’s mobile service providers, large handset manufacturers, and government policies led to this unusual set of circumstances. Although Korea was the first nation in the world to commercialize CDMA technology and build nationwide networks with it, public use of these 3G data services remained at extremely low levels through mid-2009, even as the iPhone was proving immensely popular all around the world. Consumers were put off by the high cost of such services, while Korea’s mobile service providers feared the loss of voice revenues to the new VOIP services like Skype. Finally, the extraordinarily rapid diffusion of smartphones here in South Korea, owing partly to pent-up demand, has a decidedly youthful cast. The same young people who were loading Skype onto their iPod Touch devices while awaiting the arrival of the iPhone in 2008 and 2009, and who studied English more avidly than their parent’s generation, were early adopters of the iPhone and Android devices. Interpreted within the above background context, the recent complaint against Google in South Korea has alternative explanations that do not fit so neatly with the story line advanced by most international media. It arose partly out of a natural reluctance on the part of Daum and Naver to see their market share internet search slipping away with the introduction of smart phones. Other explanatory factors are language and more global patterns of internet use by young people. Google’s growing share of Korea’s mobile search market may in fact be driven by web surfers who are discovering a great deal of English and other language content on the wide internet beyond the current search capabilities of Naver. This would also explain why it is not only Google’s share of search that is increasing with the adoption of smart phones, but also use of Facebook and Twitter, social marketing innovations that, like Google, originated in the West.