Summary
iPhone in Korea will face numerous uphill battles in Korea including CDMA technology, Korean language interface, lack of application, lack of eco-system, retail channels, cultural barriers, and will not be able to take any significant market share away from Samsung & LG.
Analysis
1. Technology & Infrastructure: South Korean cell phones use CDMA whereas iPhone uses GSM, two fundamentally different technologies. Although Apple has been rumored to develop CDMA version of iPhone for Verizon in the US, it has NOT been introduced anywhere in the world yet.
Testing a new CDMA iPhone for the Korea's CDMA carrier network is no trivial matter, and that should normally take place as a part of new product development cycle; is Apple going to move its CDMA phone development to Korea, for this?
2. Lack of applications, lack of Korean language interfaces, and lack of eco-system:
Apple will need to convert its user interface to handle Korean language; Korean language requires "double-byte per character" structure, Apple will need to REVISE its iPhone's Mobile Operating System before local language version of application can take place.
Once iPhone's future Mobile Operating System can handle "double byte character" , Apple Korea's software developers need to localize iPhone user interface to Korean language.
Then, Korean mobile phone ISV's can attempt to develop applications for iPhone for the Korean market. But, these ISV's need a strong cooperation from a carrier that plans to sell iPhone: KT, LG Telecom, or SK Telecom. However, both KT & SK Telecom have already established a strategic relationship regarding a carrier's use of cell-phones made by Samsung at the CEO level & below. LG Telecom uses smart phones made by its sister division, LG Electronics-Telecom Div.
In addition to carrier's interest/strategic relationship with Samsung or LG, ISV's interests in developing software for a particular platform depend on the platform's market success and huge installed base. Apple iPhone has no installed base and faces major questionability in its market acceptance against Samsung or LG. Given this, I doubt that there would be any significant eco-system interests for the Korean iPhone that would matter.
3. Cultural barriers: Look at Nokia, Motorola, Google-Korea, and others in Korea. Despite huge investments by each of these companies in Korea for many years, they either FAILED or are marginally surviving after so many years...
In Korea, if you do any significant amount of business with Samsung, you need to use/own Samsung phone, and vice-versa for LG. Samsung's front desk checks the type of mobile phone you carry, and record your name, your affiliation, your Samsung inside contact, your mobile phone type, etc.... You do not dare to carry iPhone if you go into a Samsung site....
Culturally, one finds Korean market to be very discriminating against foreign IT products/services. That is especially true in mobile phones, and Internet Services which are crucial for iPhone's market success in Korea.
Both Samsung & LG have been offering smart phones for the Korean Market for sometime, and Korean people would rather buy either Samsung or LG because of repair/warranty issues if everything else is the same.
In Korea, cell phone sale is NOT subsidized by carriers, and one has to pay a full price for the unit, and nearly 100% of the sale is handled thru "mom & pop retail channels". "Mom & pop retail channels" go for the volume, and Apple will find it very difficult to crack these retail channels to sell Korean iPhones, even if it gets launched.
Any comments/views are welcome.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
