The Size of Samsung Electronics and its Challenges

The Korea International Trade Association recently re-published an article from the Wall Street Journal on the size of Samsung Electronics and the challenges it faces. In terms of size, it is already about the size of Hewlett-Packard with roughly $110 billion in annual sales. About one third of its revenues come from companies that compete with it in selling television sets, computers, mobile handsets, semiconductors and other electronic devices. The best example of this is Apple, which is one of its biggest customers for flash memory chips and screens. As shown in the accompanying graphic , Samsung is now a leading player in several key markets within the ICT sector. It achieved this status without major acquisitions and by running its own factories. As the article notes, this is similar to what IBM did back in the 1980s, making both the components for electronics products and the actual devices sold to consumers.

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.

Google's Search Market Share and "Walled Gardens"

A comment on my previous post asked why I included the Czech Republic, along with China, Russia and South Korea, as "walled gardens." A good question.

I based the reference largely upon a September 16, 2008 article in The Financial Times, entitled "Google still struggling to conquer outposts," which included a non-Google map of the world as an interactive graphic. The article used Szenam, Baidu, Yandex, Naver and Yahoo in Japan as "local success stories." What they all have in common, according to the article, is that they (1) invested earlier and developed technologies that work with (2) the local languages.

The term "walled garden" may not be the best to describe what is happening in all of these countries. For example, China is undoubtedly the most aggressive of these countries in governmental efforts to filter, censor and control the internet. However, in the case of Korea, I believe that the overwhelming preference for Korean language, together with the fact that Naver does not really search the internet, as Google's bots do, effectively walls off most consumers here from using most of the content and applications that are out there on the web. With the arrival of the iPhone tomorrow and Android phones soon to follow, that situation may be about to change.

The Apple iPhone in Korea's Walled Garden

I couldn't resist the title for this post, conjuring images as it does of the Garden of Eden and what went on there, but there is some logic to that symbolism.  The Apple iPhone is about to be released in the Korean market starting tomorrow.  The Korean market, like those of China, Russia and the Czech Republic is an internet walled garden, built almost entirely on use of only Korean-language web sources and databases.  The Apple entering this garden, on the other hand, is built on a different principle:   wide access to the internet worldwide and to applications devised by internet users all around the world.   It appears possible that the Apple iPhone, like the apple in the Garden of Eden, is going to mean the end of the garden as we know it!
Most people I talk to know that Korea has the most advanced wireless networks in the world and plenty of digital capacity, so they are surprised to learn that only 10 or 11 percent of the populace purchase data plans and actually surf the internet on their 3G phones.  It seems that the Apple iPhone, along with Android and other phones to follow, are going to break that pattern once and for all.
A good editorial in the Chosun Ilbo yesterday called the iPhone a "wake-up call" for Korean telecoms.  I think it may be even more than that, since consumers here may decide they like the iPhone, its apps, and its broad use of the internet.  Once Android phones arrive, it is difficult to imagine Korean consumers staying away from some of Google's powerful cloud-computing tools.

iPhone Equals Explosion of Korea's Mobile Internet Market?

Now that the iPhone is officially coming to Korea, there seems to be a flurry of media attention to what it all means. Many observers are beginning to pick up on the larger significance, as indicated by today's article in The Korea Times, headlined "iPhone's Debut May Spark Mobile Internet Usage." Of course it will! Consider the following:

• The major reason for the iPhone's popularity around the world is that it makes the internet mobile. Most of its applications depend on the internet.
• Mobile broadband is the killer application for mobile devices and the main transformation taking place in mobile communication worldwide involves the transition from phones to handsets that are internet-capable and more like hand-held PCs.
• There is a very good chance that Android phones will rather quickly surpass the iPhone worldwide and in the Korean market because of (1) Google's powerful range of cloud computing information services and (2) the more open nature of the Android platform.

The next year or so will be a period of great transformation in Korea's mobile market, with positive implications for consumers here.