"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.