Are Smart Phones Tracking Users in Korea?

The Joongang Daily this morning carried an article with the accompanying data (click on the graphic to view a full sized version) on the growth of location-based data and location-based service businesses in Korea.  Not surprisingly, the chart shows a rather dramatic increase in the business between 2009 and 2010.  This is exactly what we would expect, given that Apple's iPhone was delayed in coming to the South Korean market and did not arrive here until November of 2009.  While location-data businesses, which include Apple and Google, collect location data, location-based services businesses use that data for various services such as logistics, transportation, or emergency services. LBS is considered a rising business, and not just in Korea. Research firm Gartner said the market for location-based services - currently worth $2.9 billion - will to rise to $8.3 billion in 2014.

Android and Korea's Handset Makers

There is new evidence that Android will become the dominant mobile platform worldwide, if present trends continue, and this has a powerful effect on Korea's handset makers, led by Samsung and LG.  As reported in The Wall Street Journal and shown in the accompanying graphic (click to see full-size version) shipments of Android-based smartphones surged sevenfold year-on-year in the fourth quarter giving Android a 33% share of the global market.  This year HTC, Samsung and LG Electronics, all of which made late entries into the smartphone market, plan to further their push with the introduction of new Android models in order to meet lofty sales goals.  Samsung reached its goal of selling 20 million smartphones in 2010 and more than 50 percent of those models were Android-based.  LG showed improved sales results from its Android-based Optimus One handset, selling three million units since its launch in the second half of last year.

The Rapid Diffusion of Smartphones in Korea

The Joongang Daily carried two articles today that underscore important aspects of the transformation taking place in mobile communication, here in Korea as well as globally.  The first article noted that the recent Chuseok holiday led to a surge in the downloading of smartphone applications. Applications for road navigation, expressway traffic congestion and charye, the Korean ancestor veneration ritual, topped the popular application list during the holiday period. The same article noted that smartphone users in Korea currently number three million, a figure that is expected to double by year's end. I expect that may be a conservative estimate. Just think of how many family members and relatives had a chance to see the iPhone or Android phones in operation over the Chuseok holiday! That sort of exposure probably represents the most powerful form of sales promotion for these devices here in Korea.
A second article described the parts bottleneck that is being faced by the manufacturers of smart phones. As shown in the accompanying graphic (click to see a larger version), industry forecasts in the spring of 2009 significantly underestimated the worldwide growth of demand for smart phones.  Consequently, such parts as the organic light emitting diode (OLED) screens are in short supply.  The manufacturing process for such parts bears many similarities to that for semiconductors and requires long lead times to build fabs and ensure adequate capacity.

Police Raid the Office of Google Korea

As reported in most of the local media and in The New York Times, Korean police raided the offices of Google Korea on Tuesday as part of an investigation into whether the company had illegally collected and stored personal wireless data.  The search company is already facing lawsuits and investigations in several countries in connection with private wireless data collected for its Street View service.From late last year until May, Google Korea dispatched cars topped with cameras to cruise around the country to photograph neighborhoods before the planned introduction of Street View. The police suspect that those cars might have illegally captured and stored personal data from wireless networks while they were mapping streets, a statement by the Cyber Terror Response Center of the Korean National Police Agency said. Google said it would cooperate with the investigation. This is a story that bears following, especially since Google is already facing investigations and questions in several other countries on this same issue.

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.

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. 

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

One part of the "iPhone Effect" or the "iPhone Shock" to the Korean market is becoming clearer.  An article in today's Chosun Ilbo is headlined "The iPhone Casts Clouds for Korean Handset Makers."  The article notes that Korea's mobile phone exports for the first quarter of 2010 were down 11.4 percent compared to a year ago, mainly because Samsung and LG are unable to compete strongly in the surging "smartphone" segment, led by Apple's iPhone and the Google-based Android phones.

This is just another strong piece of evidence that Korea's leading handset manufacturers and exporters bear a big part of the responsibility for the two and a half year delay in bringing the iPhone to Korea.  

A Space-Themed Android Onslaught in Korea?

The forthcoming entry of large numbers of Android phones into South Korea's market is taking on a number of themes related to space.  An article in the Chosun Ilbo today speculates on why this is the case.  Samsung has chosen the name Galaxy for a smartphone to be released later this month.  Earlier this week, Pantech unveiled a smartphone called Sirius.  LG Electronics new smartphone slated for release next month is being developed under the name Eclipse.
The space theme is in line with the open nature of Google's Android project.  The name Android itself refers to robots that appear in science fiction stories and movies such as Star Wars.  Although the Chosun Ilbo story did not mention it, we might add the obvious fact that these new smart "phones" with their ability for mobile broadband access, locational services and more, are a key point of convergence and contact for entering cyberspace!

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!

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.

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.

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!

"Korea has not yet begun to develop its mobile technology":Google's Expansion Plans

The Joongang Daily carried a brief report today about Google's expansion plans in Korea.   It noted the changes that Google is making to its home page.  I discussed this in an earlier post that referred to Google's plans to "Koreanize" its home page.
What really caught my eye about this latest article is the quote at the beginning, "Korea has not yet begun to develop its mobile technology."  As readers of this blog will note, I agree with the basic sentiment expressed by this quote.  As Cho Won-gyu, the head of Google Korea's research and development suggests, with the introduction of more smart phones next year, Korean consumers will begin to learn about many broadband internet applications from which they have been shielded to date.  Take for example video.  Although Youtube is now the most widely used video service in South Korea, it is not yet widely used on mobile phones.  Now that the iPhone is already here and numerous Android phone models are coming next year, that is about to change.  Given Google's strong array of web-based information services and their availability in Korean language versions, it is not too difficult to predict what will happen in Korea's mobile market next year.  Google will gain market share for all of its internet services, as Korea's customers become acquainted with them via the new Android phones that will probably come to dominate the mobile market here.

The iPhone is now here....where are the Android Phones?

The absence of the Apple iPhone in Korea's market was only a symptom of what was happening here.  Somehow, Korea's three mobile service providers (KT, SKT and LGT), its leading handset manufacturers (Samsung and LG Electronics) and the government managed to allow the domestic market to ignore a clear worldwide trend toward mobile broadband internet.  Now it appears they are going to pay the price.
All of the news these days is about the arrival (yesterday) of Apple's iPhone in the Korean market.   However, a much more significant development is around the corner.  It is the arrival of Android phones, manufactured by Korea's own companies, Samsung and LG, as well as Motorola, and a number of other companies around the world.  Yet there is very little specific news appearing about the release of Android phones here, despite the fact that Samsung released its first Android model in the European market months ago.
In short, despite the euphoria for some of the iPhone's arrival here in South Korea, it appears that it may take another year or two for this market to catch up with global trends. There are many ironies at play here, but this seems to be the consequence of  an exclusive focus on Korean language applications, services and software in this market.

The Imminent Mobile Internet Revolution in Korea

There is more information to add to my earlier posts on the rapidly approaching shakeup in Korea's mobile market.  A recent article in the Korea Herald highlighted some of these points.   It began by noting that only 10 percent of Korea's mobile phone users currently subscribe to a fixed rate data plan for mobile internet, compared with larger percentages in other advanced countries, as shown in the graphic (click the graphic for a full-size version).  Not surprisingly, revenues from data services in all those other countries are significantly higher than in Korea. The main reason for Korea's low percentage of data-service use, in a country where everyone carries an internet-capable 3G phone is, of course, the outrageously high rates charged for data services.  Also, smartphones make up only 1 percent of total handset sales (I must confess that I didn't realize it was this low!)   All of this while the iPhone, along with the Blackberry and other smartphones have enjoyed booming popularity around the world for the past two years or more.
In the Korea Herald Article, analysts claim that the iPhone will create a breakthrough in Korea's wireless internet services.  One is even quoted as saying that the iPhone will bring about a paradigm shift that will lead to a better telecommunications environment for consumers.  I would simply note that the paradigm shift is well underway all over the world, and it involves not only Apple's iPhone but most notably the Google-supported, open source Android platform, and of course Symbian which continues to lead the world in smart-phone market share.   As noted in my previous post, Android is predicted to move ahead of the iPhone by 2012.
A final thought:  although this post focuses on mobile internet, the continued rapid convergence of digital media means that it has ramifications for converged services in the "ubiquitous network" era that is rapidly approaching.  Mobile handsets, after all, promise to be the key device in that era, providing users with services based on increased ambient intelligence in Korea's cities, towns and even rural fishing and farming villages.

Samsung Delivers Linux Handset to Vodaphone, but NOT for Korea

Samsung will provide Linux-powered mobile phones to Vodaphone, the world's largest wireless carrier, based in London. The phone is the industry's first commercial handset using release 2 of the LiMo operating system. LiMo, backed by a large group of global handset vendors, is a platform based on the open source Linux, which can be used on mobile phones for free. The Korea Times has an interesting article on this development. By now, everyone should realize that the future of the mobile communication industry is going to revolve around

• a growing array of handsets that are essentially like small internet-enabled PCs. These will become like a commodity, with increasing power and lower prices,
• the real excitement and money in mobile will be in the content (software and applications) that mobile devices allow customers to use.

Given these realities, I only have one question about the new LiMo based phone by Samsung. When will it, along with Samsung and LG's android phones, hit the Korean market? For the overall health and growth of the market, the sooner the better.