Smartphone market in Korea wakes up

William Lee/Ovum
19 Apr 2010

The abolition of some restrictive technical rules for handsets has resulted in an iPhone-led smartphone boom in Korea. However, there are still major regulatory barriers to smartphone growth that must be addressed. Even if these barriers are removed, global handset vendors will need to build brand awareness and new partnerships with operators in order to benefit.

Until recently, Korean handset vendors and mobile operators showed little enthusiasm for the smartphone market, asserting that Korean consumers would not use such complicated handsets and that any enterprise device would not fit in with Korean business culture.

However, the Korean smartphone market has grown rapidly in recent months, and vendors and mobile operators are now pushing hard to increase their smartphone product line-ups. The iPhone was the breakthrough product. By the end of February 2010, the iPhone alone had recorded 400,000 sales in three months after launch, out of a total of 1 million smartphones in the same period. According to current trends, approximately 3 million smartphones will sell in Korea this year, out of a total of 20 million handsets. Growth is slowing, but still healthy.

Although the early iPhone rush is abating, Korean consumers have opened their eyes to smartphones. Enterprises are also recognizing that smartphones could increase their productivity.

Regulation inhibits growth

The use of mobile Internet services is common in Korea. However, various Internet services are hindered by intrusive regulation, which inhibits expansion of the smartphone base. For example:

Google has blocked the posting of YouTube videos from Korean accounts because it refuses to accept the requirement for real-name verification. As a result, any uploading to YouTube from smartphones is blocked. iPhone users can avoid this by changing their region setting, but the Korea Communications Commission (KCC) does not sanction this. In addition, game censorship rules require the registration of all games, discouraging content innovation and investment to meet the mandated digital certificate rules, users must install Active-X plugins, forcing them to install Internet Explorer if they wish to use m-commerce and e-commerce services. As a result, market share for Internet Explorer in the Korean Internet browser market is approximately 98%.

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