Mon, Dec 17, 2012 - Page 14 News List

South Korea proves tough market to crack for HTC

Staff writer, with CNA

As one of the most tech-savvy countries in the world, South Korea is the focus of many foreign companies’ attempts to sell more smartphones, but it is proving to be a difficult market to conquer, one with many die-hard fans of local brands.

One company that is reassessing its strategy in South Korea is Taiwanese smartphone vendor HTC Corp (宏達電).

The Taoyuan-based manufacturer in July announced that it had decided to close its South Korea office to streamline its operations and improve efficiency.

An HTC official recently said that the company had faced some difficulties during its negotiations with South Korea’s telecoms operators.

Although these carriers say publicly that they are happy to work with any handset maker, they often express concern about whether foreign products are good enough, the official said.

“It’s not enough to be just as good as South Korean firms’ products ... You need to have superior brands and products so that the carriers there would be willing to sell them,” said the official, who spoke on condition of anonymity.

That means foreign brands need to introduce their flagship smartphones with cutting-edge technology or with hardware specifications that are better than industry standard.

Furthermore, South Korean operators also want foreign companies to spend heavily on local advertising for their smartphones and to give promotional gifts to consumers, expectations that are hard for foreign brands to meet, the official said.

“You can always enter the market, but eventually, you will find that you cannot play the game for a long time,” the official said.

In the first quarter of this year, non-South Korean smartphones accounted for only 3.4 percent of mobile phone sales in South Korea, with Apple Inc’s market share dropping sharply to 2 percent, research firm Gartner Inc said. That was still higher than HTC’s market share of 0.7 percent, Google Inc-owned Motorola Mobility Holdings Inc’s share of 0.4 percent and Japan’s Sony Corp’s share at 0.3 percent, Gartner said.

However, in the first quarter of 2010, Apple accounted for as much as 23 percent of South Korea’s mobile phone sales after the country started selling the iPhone 3GS in November 2009, the researcher said.

The sharp drop in Apple’s market share came as consumer interest shifted to South Korean devices with larger screens, long-term evolution (LTE) super-fast wireless connectivity and shorter product cycles, according to a recent study by US-based tech news Web site Engadget.

Apple’s iPhones have had the same screen size of 3.5 inches for years until it started using a 4-inch display in its iPhone 5 this year.

Meanwhile, South Korea-based Samsung Electronics Co overtook Apple as the world’s top smartphone vendor in the third quarter of last year thanks to the hot sales of its 4.7-inch flagship model, the Galaxy S II, which was unveiled in February last year, research firm Strategy Analytics said.

Samsung had grabbed a dominant 70 percent share of South Korea’s smartphone market by the end of July this year — two months after the launch of its newest 4.8-inch Galaxy S III — South Korea’s MK News Web site reported.

“The [South] Korean market is especially difficult because of the dominance of not just Samsung, but other local players — LG Electronics Inc, and Pantech Co,” Ovum analyst Mark Ranson was quoted as saying by The Register, a British technology news Web site.

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