Korea tops the e-intensity index again in 2013

For the past five years, the Boston Consulting Group has compiled and published an e-intensity index. The data for 2013 were published in December and South Korea again leads the world, ahead of a group of Scandinavian countries and the U.K.  The 2013 BCG e-intensity index can be accessed here.   Note that registration and a login is required to use the interactive graphic.
The bar graph published with this post (click to see a full size version of the graphic) accompanied the 2012 E-intensity index. The 2012 BCG report contained the following interesting observation.
"Back in 1997, the White House also put forth five principles that described how governments should approach Internet policy. The first and most important was that “the private sector should lead.” This has been borne out by time. The Internet has enjoyed widespread adoption in countries with vibrant private sectors that allow the inventions of Apple, Google, Orkut, Rakuten, Spotify, and their kin to thrive. But if we examine the e-Intensity Index leaders, a more complex—and interesting—story emerges. (See Exhibit 1.) Many of the most advanced digital economies—South Korea, Sweden, and Japan, for example, three of the top ten 2012 e-Intensity Index nations—have developed coherent, long-term strategies for going digital."
The e-intensity index measures the relative maturity of Internet economies on the basis of three factors: enablement, engagement, and expenditure.

• Enablement accounts for 50 percent of the total weighting and measures various aspects of fixed and mobile infrastructure deployment. 
• Engagement, 25 percent, measures how actively businesses, governments, and consumers are embracing the Internet. 
• Expenditure, 25 percent, measures the proportion of money spent on online retail and advertising.

The Pyeongchang 2018 Winter Olympics: Some financial and cyber realities

As the world gets ready to focus its attention on next month's Winter Olympics in Sochi, local media have given some attention to the next Winter Games, to be held in Pyeongchang in 2018.  Specifically, the local press are discussing the pros and cons of the government's announcement that it will invest about $2.8 billion over the next five years in Gangwon Province to prepare for the 2018 games.  The accompanying graphic (click to see a large version), published in The Korea Times, shows the zones where much of that investment is concentrated.
Although the expenditure of $3 billion and questions about use of Winter Olympic facilities in the years following the Games are certainly important, they should be kept in perspective.  In this day and age, the Olympic Games, both Winter and Summer are primarily a global media event.  The reach of the Olympics, the experience of the Games and the manner in which they are financed, all depend heavily upon television and the media. That means, of course, that the broadband and mobile communication revolutions are a major part of the current transformation in the Olympic experience.  We saw glimpses of this in the London Olympics, and Sochi is being billed as the first "bring your own device" Olympics.  In this regard, it is important to remember that Samsung Electronics  is one of the Olympic TOP sponsors and the official mobile communication provider for the Olympic games.  According to Reuters, Samsung Electronics spent more than $14 billion, more than Iceland's GDP on marketing and advertising in 2013.  As reported in the Korea IT Times, Samsung's Wireless Olympic Works (WOW) app has just been released and "As part of the “Samsung Smart Olympic Games Initiative”, Samsung will provide around 18,000 mobile devices to the Olympic Family, including executives, staff, and officials from the IOC, National Olympic Committees and organizing committees in Sochi.They will be connected to Samsung’s WOW service which will provide essential, up-to-date Games Time data and connectivity that is crucial to the Olympic Winter Games operation."  According to Forbes, Samsung will provide each athlete at the Sochi Games with a Galaxy Note 3.  The magazine notes the global promotional impact of 2,500 athletes using those devices to record and send video during the opening and closing ceremonies of the Games.

Samsung's challenge is Korea's imperative

As reported today in the Joongang Daily, Samsung Electronics operating profit in the fourth quarter of 2013 fell by 6 percent, largely because of the declining profitability of the company's "cash cow" smartphone business. (click on the accompanying graphic to see a larger version) This marked the first profit decline in nine quarters and was attributed to  "...slowing growth in sales of smartphones and tablets in developed countries, an overly strong local currency and higher marketing costs compared to arch-rival Apple." The article also noted that "Disappointment in the earnings of Samsung Electronics, which accounts for 20 percent of Korea’s stock market capitalization, wasn’t totally unexpected. But the scale of the decline was a surprise, and the company’s shares dropped 0.23 percent from the previous day."
Globally, more than half of all mobile phones being sold these days are smartphones.  However, Samsung is facing increased competition not only from Apple, but also from other manufacturers of Android devices, notably in China.  Also, smartphones like other computing devices are modular and becoming increasingly commoditized.  As noted in an earlier post, companies like Google are looking into "build your own" or "design your own" mobile phones.  Such technological and economic trends suggest that the challenge for Samsung is part and parcel of the next big hurdle for South Korea, to lessen its heavy dependence of manufacturing and exports by large chaebol industry groups while increasing its strength in software, services and content.  This has been the subject of numerous posts, including this short one last October.
Gartner's latest projections underscore the urgency for Korea of making this transition.  As shown in the accompanying table, the three categories of enterprise software, IT services and telecom services together account for 78 percent of projected worldwide IT spending for 2014, while all the hardware devices together, including smartphones, make up only 18 percent of the total.
In light of Samsung's large influence on South Korea's export-led economy, it is probably appropriate to suggest that its challenge to shift from emphasis on hardware to a more balanced approach that includes software innovation is an imperative.   That imperative, in turn is at the heart of the Park Geun-hye administrations emphasis on digital convergence as a basis for realizing the "creative economy."

Mobile video and the future of T.V.

I did a post in late December with some findings from a recent KISA nationwide survey on mobile internet use.  That post noted the extremely rapid diffusion of LTE mobile services in South Korea and the exponential increase in data traffic generated by the popularity of these services.  
Here I would like to stress what is both a main reason for the popularity of LTE and a major cause of the increase in data traffic, the viewing of mobile video.  As reported last year by Digital Times, a Korean language publication of  the Korea Economic Daily, 94 percent of all smartphone users reported viewing mobile video as of April 2013, up from 88 percent a year earlier.  The total proportion of time spent viewing mobile video was also up almost two percent over the same time period.
As shown in the accompanying graphic (click to see a full size version), Cisco's Visual Networking Index predicts that mobile video will increase from 51 percent of global data traffic in 2012 to 66.5 percent of traffic in 2017.   Korea is already near the projected global levels of mobile video traffic and it is expected to increase to 74 percent by 2017. The Digital Times article also noted the popularity of Google's YouTube in this country and its successful advertising-based commercial model.  Overall, video on demand accounted for about 57% of all mobile video viewing.  According to Nielsen KoreanClick, Youtube was by far the most popular entertainment (video) web site in Korea as of December 2013, reaching nearly 34% of the market.
Television is changing, with implications for policymakers, consumers and those who make and distribute programs.  Those of us living in South Korea these days have a front row seat to observe the changes.

Dokdo is Korean territory: historically, geographically and in terms of international law

The small rocky island of Dokdo in the East Sea is in the news again owing to a public relations effort by the Japanese government to claim that it is actually Japanese territory.   Late last year, Japan's foreign ministry posted a video to YouTube in several languages making such a claim.
Readers of this blog will know that I've posted frequently on this topic in recent years (if you're interested, just enter the word Dokdo in the search box at the right.)   Dokdo illustrates one of the main issues of the emerging information era in which cyberspace contains a flood of information, making it more difficult to sift out the truth and trustworthy information from rumors and falsehoods.
South Korea's Ministry of Foreign Affairs has put up a new section on its website, which is so far only available in Korean. The accompanying graphic is a partial screen capture from that site. (click to see a full size version)  The Ministry has also published a short video to YouTube that explains why, historically, geographically and in terms of international law, Dokdo is Korean territory.
What makes this matter so hurtful and even insulting to many Koreans is that a large part of the "evidence" Japan has assembled to support its claim to Dokdo involves events after 1905, and the start of Japan's near half-century colonization of South Korea.