iPhone "Invasion" of South Korea? Some Background

The Los Angeles Times story entitled "Apple's iPhone is Invading South Korea, home of Samsung's Galaxy S," is getting quite a bit of attention these days, at least in the blogosphere.  It will not surprise readers of this blog that I cannot resist commenting on the article.  For one thing, the "invasion" is already over, having taken place more than a year ago.  Just use the search feature to the right and enter "iPhone" and you'll see that I began posting on this topic back in 2008, over a year before the iPhone finally arrived here.  By that time, it had become very apparent that something was amiss in South Korea's mobile market.  It was missing out on a major global trend toward mobile broadband, epitomized by the Apple iPhone.  Even when the iPhone finally arrived in South Korea near the end of 2009, there was another months-long delay before Android-based phones began to appear.
So, it is difficult to conceive of the Apple iPhone's entry into the Korean market as described in the L.A. Times article as a "bold offensive by a foreign competitor invading its lucrative home turf with a breakthrough product."   In fact, the iPhone arrived in Korea about two and a half years after its introduction in the United States!
Some of the reasons why it took so long for the iPhone to reach this market have been explored in earlier posts on this blog.  However, it is now safe to suggest that this delay did not necessarily work toward the best overall interests of either consumers here or the large mobile handset manufacturers like Samsung and LG.  In fact, as noted in an earlier post, Korean exports of mobile handsets took a huge hit because of the delayed transition to smart phones.  Of course, the drop in exports was partly compensated for by the fact that most of the high value-added parts in the iPhone are manufactured by Korean companies.
In late 2009 when the iPhone arrived in the Korean market, many industry estimates suggested that there might be 700,000 or even a million customers for the new phone.  In fact two million iPhone handsets have been sold in just over a year since its introduction.
The larger impact of the iPhone in Korea can only be understood by looking at the broad transition that is now underway here toward mobile broadband.  In important respects, this development was artificially delayed by the obstacles that prevented a more timely arrival of the iPhone and Android phones.  Clear evidence of the rapid transition to mobile broadband can be found in various places, including the rapid uptake of Facebook and Twitter here, as touched on recently.
Many in Korea, perhaps led by top executives of KT, would suggest that the arrival of the iPhone and the accompanying "smartphone shock" were less of an invasion than a blessing or "wakeup call" for South Korea's market and its exporters.

South Korean Director Creates a Film with The iPhone 4

One of South Korea's well known film directors, Park Chan-wook, has created a 30 minute fantasy film entitled "Paranmanjang," (Ups and Downs) using the iPhone 4.  It is receiving quite a bit of publicity, including a recent article in the Los Angeles Times.  Park first achieved fame in 2000 with his film "Joint Security Area."  The idea arose last fall just as he and his brother (and fellow director) Park Chan-kyong were set to begin filming a fantasy about a middle-aged fisherman who one day hauls a woman out of the water's depths. That's when South Korea's exclusive iPhone distributor offered to finance the $130,000 project if the pair agreed to use the device to make a theater-quality film.
This is an interesting story indeed.  On the one hand, it illustrates a certain Korean willingness to use and experiment with new communication technologies.  On the other hand it shows that, at least in certain niches, Korea may have its own strengths in the creation of media content.  The nation is frequently criticized for being relatively weak in content creation, while strong in manufacturing and hardware.

Social Networking and Korean Social Networking: The Rise of Twitter and Facebook

In retrospect it is clear that "social networking" via the internet arrived in Korea, in the form of Cyworld, almost half a decade before Facebook appeared in the United States.  However, as pointed out in an excellent  article in The Korea Times, Cyworld's "mini homepages" were tailored for users seeking to maintain a closed and controlled network of immediate friends.   I assume part of Cyworld's great appeal here in Korea is that it naturally extended the Korean penchant to form close networks among classmates,  family or friends from the same hometown or business.
It is most interesting that Facebook and Twitter, along with Google to some extent, only began to seriously penetrate South Korea's market with the arrival of Apple's iPhone about a year ago.  According to local market research, the number of visitors to Facebook and Twitter reached 7.38 million and 8.65 million respectively, during the month of September.  This represented a 650 percent year-on-year increase for Facebook and a 580 percent jump for Twitter.  Cyworld saw its visitors drop nearly 12 percent over the same period.
In response to these developments, local services such as Cyworld and Naver are introducing their own alternatives.  In the case of Cyworld, one such service is C-Log, a Facebook resembling service.  Time will tell about the success of these services, but as prior posts on this blog have argued, (for example here, here, or here.  Better yet, search this blog for "language") language and culture are extremely important factors in shaping Korea's information society and this reality is unlikely to change anytime soon.

Korea's Mobile Broadband Revolution: Some Market Projections

Pyramid Research recently came out with a report that includes projections for South Korea's communications market revenue through 2015.   The accompanying bar chart (click on the graphic to see a larger version) summarizes their projections.  Not surprisingly, fixed voice service is projected to decrease, while fixed VOIP (Voice over Internet Protocol, as in Skype) is projected to increase significantly by 2015.  Mobile data, the green portion of each bar, is projected to show the greatest increase through 2015.  This segment of the market essentially refers to mobile use of the internet via Apple's iPhone, Android handsets and other devices.  Of course, it include mobile use of Skype, which should come naturally to those who already use it as a fixed VOIP service on their computers at the office, in the home or elsewhere.
The main trend represented in the graphic included here is that broadband internet is going mobile!  I would be surprised if mobile data services don't grow even more than Pyramid predicts.

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.