On November 28th, after months of rumors and speculations, nearly 2 years since the official global launch, the iPhone 3G and 3GS finally reached the consumers in Korea.
Interesting phenomenons are arising from the launch of the iPhone in the Korean market. Because 2 of the leading mobile phone makers in the world are Korean, and because almost all foreign mobile phone brands that entered the Korean market were unsuccessful, everyone is curious as to how the iPhone will fare in such a hostile market. The news media is comparing Samsung’s Omnia II with the iPhone in order to position it as a legitimate alternative. But in a time when reporters are not privileged with exclusive information, online communities are in heated debates as to whether this comparison of the 2 phones is even justifiable, or just media propaganda being endorsed by Samsung and Korean telecom companies to shoot down the iPhone. Those who defend the iPhone are being accused of being blatant Apple brand loyalists, while those who defend the Omnia II are being mocked as blind nationalists. Here are some concrete facts and developments that have occurred, and is expected to happen in the near future, all because of the launch of the iPhone in Korea.
Because of the rumors that the iPhone was going to be launched at the end of November, Korean consumers delayed purchasing existing mobile phone models, resulting in the decline of sales in October for both Samsung (56% decline) and LG. Samsung still dominates the domestic market with 50% of the market share, but the iPhone is expected to own 5% of the market within a month. The iPhone has sold 90,000 units in 10 days.
The iPhone is expected to ignite the mobile internet and smart phone market in Korea, which has been slower in growth compared to other countries. Smart phone market share in Korea is currently only 5%, compared to 13% in other parts of the world.
Profits made from mobile internet usage by telecom companies in Korea is only 17.4%, compared to 41% in Japan, 32% in Australia, 27% in the UK, China and Hong Kong, and 25% in the USA. Because mobile phones in Korea do not have Wi-Fi function, consumers are reluctant to use the current mobile internet service provided by the mobile telecom companies.
The Wi-Fi function was one of the obstacles that prevented the iPhone from being launched in the Korean market. While the iPhone had it, all of the other mobile phones in Korea didn’t. Most of the Korean phones that were being sold overseas had it, but the same mobile phones sold in Korea didn’t.
Mobile phone makers justified leaving out the Wi-Fi function on mobile phones for the Korean domestic market to the consumers’ need and use. They said Korean consumers preferred the DMB (Digital Multimedia Broadcasting) function to the Wi-Fi function, and they could only fit in one or the other into the phones. Hence, none of the mobile phones available in Korea had a Wi-Fi function.
Because the Korean mobile telecom market is more so controlled by the telecom companies, the specs of the mobile phones sold in the Korean domestic market are discussed with the telecom companies before the phone makers assemble them. The Wi-Fi function being left out was probably not just about the consumers’ needs, but about the profit the telecom companies were making with the mobile data usage as well.
The iPhone was launched in Korea by KT, which is second to SK Telecom in mobile telecom market share. KT is hoping the iPhone will convince consumers to switch over from SK Telecom. While still minute in numbers, so far it seems the iPhone is having an effect. Half of the new iPhone users have come from other telecom companies, and of the half, 70 to 80% are from SK Telecom.
Since the launch of the iPhone was announced, the price of Samsung Omnia II, the mobile phone that is currently supposed to be the challenger to the iPhone in the Korean market, was reduced drastically. Many smart phones that will be released in Korea in the coming days announced that it would include the Wi-Fi function. SK Telecom is planning on launching Android phones into the Korean market to compete with the iPhone in the smart phone market.
It has only been 2 weeks since the iPhone was launched in Korea. Regardless of how successful the iPhone will be in the Korean market, the effect it is having on the Korean market is quite remarkable. The iPhone is making telecom companies change their stance on mobile internet service. The iPhone is making mobile phone makers change their stance on functions that were excluded in smart phones for the domestic market. Regardless of the sales result the iPhone will bring to KT or Apple, it is helping to give the consumers of Korea more choices that the telecom companies and the mobile phone companies had been ignoring.