Friday, December 12, 2008

December 10th, 2008 at 11:02 pm

Door Opens for Apple iPhone in Korea

» by GI Korea

UPDATE: The Marmot’s Hole has more on the opening of the cell phone market in Korea as well.


Good news for all of you in Korea that want to one day own a iPhone:

After dragging its heels for months, Korea’s telecommunications regulator finally came around and declared WIPI, a local software standard mandated for data-enabled mobile phones, a mistake.

The decision will bring an end to the dreadful wait by Korean gadget lovers of iPhone, Apple’s latest product to create a global craze, with wireless carriers KTF and SK Telecom allowed to release the handsets next spring.

Following a lengthy debate, commissioners of the Korea Communications Commission (KCC) Wednesday agreed to retire the home-made standard specifications on April 1 next year, lifting what had effectively been a trade barrier for foreign electronics makers like Apple and Nokia.

“Mobile-phone operators have been required to use the WIPI mobile platform on their handsets, but considering global industry trends toward the use of general-purpose mobile operating systems, we concluded that there was a need to allow carriers the freedom to decide whether to use WIPI or not,” said Shin Yong-sub, the director of KCC’s policy bureau.

“Consumers will also be able to choose from a wider variety of products and benefit from increased price competition from handset makers,” he said.

Currently, about 86 percent of all mobile phones used in Korea are WIPI-enabled. The KCC had discussed whether to phase out the WIPI requirements over a span of six months or a year, but the suggestion was turned down with commissioners concluding that mobile carriers wouldn’t be able to replace their WIPI-based services quickly anyway. [Korea Times]

With the Korean government removing this trade barrier will Korean citizens be taking to streets claiming iPhones cause brain cancer now?

Anyway this news should make Brendon Carr happy who has been closely following the WIPI trade barrier practice in Korea:

WIPI’s largely been a failure from the perspective of encouraging value-added services. Its user experience is terrible—press “1” for Music, “2” to see some actress’ topless photos, “3” to see the Seoul subway map, etc.

But it’s done a great job of protecting Samsung and LG from foreign competition. The reason is that the cost of engineering WIPI into a phone is largely the same, regardless of whether you have a 1% market share or a 50% market share—like Samsung was reported to have in 2006. WIPI is not used in any market other than Korea, which means that anyone wanting to get into the market has to bear the same engineering cost, but can only amortize those costs across a small number of units. That means lower profits, or a loss, for the foreign maker. It tends to reduce foreigners’ interest in the Korean market.

For a phone like the Research in Motion Blackberry (they’re Canadian, not American, but bear with me), or the Apple iPhone, neither of which needs—or wants—WIPI in order to offer their services to customers, any investment in engineering WIPI compliance would be money completely wasted. The last thing that Steve Jobs wants is a service on the iPhone where users have to navigate some kludgey press “1” for this, press “2” for that menu system. Who needs that, when a full Internet browser is available? Yet under current Korean law, these foreign companies who don’t need WIPI have to bear that wasted cost. That’s a classic non-tariff trade barrier.

In case you’re wondering, in Korea the Samsung Anycall Haptic rev. 2 phone goes for US$690 for the 8GB model, US$775 for the 16GB. Rumor has it that the same phone is coming soon at US$199 in America, where Samsung faces a more competitive market. Does anyone think Samsung relishes the idea of Apple bringing iPhone here at US$199 or a similar price point? [Korea Law Blog]

Well it looks like Samsung isn’t going to be happy with this which makes me wonder why President Lee Myung-bak decided to remove this trade barrier in the first place?

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