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How smartphone became Seoul-friendly

Until Wednesday, Apple’s list of where its iPhone was available was enough to spark cries of protectionism from tech-savvy South Koreans.

You could buy one in Montenegro or Niger, but there seemed to be no route for the iPhone into Korea, where Samsung Electronics and LG Electronics dominate the handset market.

But a ruling from Korean regulators has belatedly ushered Apple’s sleek, touch-screen smartphone into the world’s most wired market.

It is the second step in the government’s attempts to make the market more competitive. The first was this year’s withdrawal of the requirement that handsets in Korea be based on a homegrown technology known as Wipi – the wireless internet platform for inter-operability.

The Wipi requirement had made it prohibitively expensive to adapt models to the Korean market and thereby severely limited the presence of foreign manufacturers.

Finland’s Nokia, the world’s largest handset maker, returned to Korea this year after quitting in 2003 because of sluggish sales.

Motorola’s share is traditionally less than 5 per cent, while Samsung and LG account for more than 70 per cent.

But in spite of such reforms, it is too early to talk of serious threats to Samsung and LG.

“Young people are expected to rush to get iPhones but, in the long-run, people will look more to Samsung and LG because of their strong branding in Korea and the inconvenience of foreign products’ repair services compared with domestic ones,” says Ha Jun-doo, analyst at Shinhan Investment.

SK Telecom, Korea’s biggest phone company, agrees with that verdict. “Realistically, it is very difficult to import foreign phones because they are not competitive,” it says.

“Samsung and LG are well aware of the local environment and produce phones that fit consumers’ needs.”

SK stresses that the smartphone market in Korea remains tiny, accounting for 2 per cent of all handsets.

It is selling Ericsson’s Xperia smartphone but says sales are slow. Since starting sales of Research in Motion’s BlackBerry, SK has sold only 9,000.

More broadly, Wednesday’s ruling on the iPhone sets a crucial precedent on how foreign companies need to deal with the sensitive issue of data control, a subject that has also been stirring discontent in the financial sector.

In telecoms, the stumbling point has been access to maps and global positioning data. This is a thorny topic because of military concerns about North Korea. Gadgetry capable of giving geographical co-ordinates could be abused to track people for political reasons, which raises spectres from Korea’s authoritarian past.

Laws on this issue affected Nokia’s 6210 Navigator phone. Its state-of-the-art facilities had to be brought into line with Korean constraints.

Regulators allowed Apple to enter the market only through a collaboration with KT, a local telecommunication company that has a licence for handling geographical data.

It is not just telecoms companies that have faced obstacles.In the banking sector, foreign investors grumble that their Seoul branches must invest in a local server to supplement the risk data system in their home base. They see this as a deliberate attempt to hobble them.

Nor is Korea the only market that is difficult to enter. China is set to sell its first iPhones before the end of the year, but only after removing the wireless function.

In spite of original scepticism in Japan, Apple’s smartphone has become one of the country’s top-selling handsets with a 6.7 per cent share of the market in August, according to market research company BCN.

Источник: Financial Times

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