iPhone cracks Korean market

10 December 2010

SEOUL: Apple's iPhone is enjoying strong sales in South Korea despite the traditional dominance of domestic mobile brands Samsung and LG.

Bloomberg reports that the iPhone has sold 1.6m units since its November 2009 launch, meaning roughly one quarter of the nation's smartphone customers now own one of these gadgets.

Globally, Samsung and LG are still bigger players than Apple, with mobile market shares of 17% and 6.6% respectively.

Apple has a share of 3.2%, but this is exclusively made up of the lucrative and rapidly-growing smartphone sector.

Moreover, the iPhone's popularity comes despite being distributed solely via KT Corp, South Korea's largest telco, while both Samsung and LG handsets are sold through all three of the nation's biggest network providers.

Peter Yu at BNP Paribas SA said: "When the iPhone was introduced, the Korean companies were in a state of denial, they underestimated the potential."

Both Samsung and LG are now making moves in the smartphone sector despite a slow start, and could leverage their traditional dominance of the South Korean mobile market going forward.

Samsung is already the world's fourth-biggest smartphone maker, having sold 1.8m units of its Android-powered Galaxy S smartphone domestically, and 5m of its "Wave" smartphones worldwide.

Meanwhile, LG is aiming for 10m global sales of its Optimus One device.

"In the next two or three years, Samsung's position in smartphones will be quite similar to or better than Apple," said Stan Jung, a Seoul-based analyst at Woori Investment & Securities.

The Korean firm is similarly upbeat on its overall handset sales, predicting earlier this week that profit margins from mobile phones would increase.

JK Shin, president of Samsung's telecom division said: "The overall direction [of telecom profit margins] will be upward and it'll be better than the third quarter, although it won't be a sharp improvement."

For its part, LG is aiming to improve its products, with group chairman Koo Bon-moo saying this week that innovation will be key in driving future growth.

"The chairman said LG must offer products providing innovative value to customers in order to take the lead," the firm said in a statement.

Data sourced from Bloomberg/Reuters/Korea Herald; additional content by Warc staff