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(News Focus) Smartphone competition heating up in S. Korea
By Lee Youkyung
SEOUL, July 23 (Yonhap) -- Competition in South Korea's mushrooming smartphone market is poised to intensify as mobile carriers and handset manufacturers are going all-out to take a bigger slice of the high-stakes, lucrative segment, industry watchers said Friday.

   Just a year ago, smartphones were nearly non-existent in South Korea's wireless market. A handful of them, which were usually Windows Mobile-based phones, were available for corporate customers. But the market for them has made rapid strides in the last eight months.

   "Even in early 2009, it was difficult to sell 50,000 units of a smartphone model. If you sell 50,000 of them, that was considered a big success," said Kim Dae-woong, spokesman for South Korea's leading mobile carrier SK Telecom Co.

   However, Apple Inc.'s launch of its iconic iPhone in November 2009 has brought a seismic change to the market's landscape. In just seven months after its debut, as many as 800,000 iPhones were sold, sparking a smartphone boom.
"After Apple's iPhone release, the smartphone market came into being (in South Korea)," said Patrick Paek, local spokesman for Taiwanese handset maker HTC Corp. "Before, there was no real market for smartphones."
Smartphones are gaining popularity fast among tech fans as they allow users to download and install new programs, play music and video, access the Internet on the go, as well as serving as a voice communication tool that phones are traditionally made for.

   Analysts forecast the battle fueled by the iPhone will become stiffer as mobile carriers are betting big on the smartphones to retain their existing subscribers and lure new users.

   "Phone subscribers demand a product at a similar level with the iPhone," said Kim Do-han, an analyst at Samsung Securities.

   Nine out of 10 people own a cell phone in South Korea, so mobile carriers are keen to keep their existing customers. But to keep subscribers, rival carriers are forced to introduce a model that could compete with the iPhone.

   "It is sort of a by-product made by Apple. There is no going backward," he added.

   Major mobile carriers in the country are focusing their marketing and sales on flagship smartphone models. South Korea's major handset makers, Samsung Electronics Co. and LG Electronics Inc., are working hard to produce their own iconic smartphones.

   This year, some 40 percent of SK Telecom's lineup are smartphone models, compared with less than 10 percent a year ago. Its rival KT also offers a dozen products, including iPhone and Nexus One, which compare with two Windows Mobile-powered handsets a year ago.

   According to a research firm, IDC Korea, local smartphone sales are projected to reach 4.8 million by December, or 22 percent of the wireless market. That is more than a ten-fold increase from last year.

   The smartphone boom has also prompted a slew of foreign handset makers to set their sights on the South Korean market, which used to be an extremely difficult place for non-Korean handset makers to crack open. Samsung Electronics and LG Electronics, the world's No. 2 and No. 3 handset makers by shipments, control some 90 percent of the local wireless market.

   Taiwan's HTC, whose Windows Mobile-based smartphones failed to make a splash in 2008, is renewing its efforts to tab the Korean market, riding on the nationwide popularity of smartphones.

   "We've launched TV ads, opened some 100 customer centers. And we'll continue to launch new models through mobile carriers," said HTC's local spokesman.

   The world's No. 4 smartphone maker is seeking to beef up its presence in the country, where its brand name is still unfamiliar with most of the population. It released Desire and HD2, with plans to launch three or four more models before December.

   Nokia Corp., the world's largest handset maker, is also benefiting from the country's smartphone fad, with its Xpress Music breaking 100,000 sales.

   Motorola Inc., Sony Ericsson Mobile Communications AB, South Korea's No. 3 handset maker Pantech Co. are also gearing up to take their shares in the heated market, while Apple and Samsung are competing to take the crown.