Competition Failure
Non-Korean smart phone manufacturers are refraining from entering the Korean market due to local market saturation and the government’s subsidy regulations.
With uncertainties increasing in the Korean market, they have canceled their plans to release new models here. Under the circumstances, Apple is likely to be the only foreign smartphone manufacturer doing business in Korea for a while. For example, Sony was planning to launch its high-end Xperia phones in Korea in the first half of this year, but the plan has been postponed indefinitely after the breakdown of negotiations with local mobile carriers.
The story is exactly the same for Chinese makers that are trying to catch up with Apple and Samsung Electronics in the global market. ZTE launched its five-inch MePhone back in August in the local MVNO market, but sales have been low. “The Korean smart phone market will remain a hard nut to crack unless the abnormal structure led by a handful of manufacturers and mobile carriers is changed,” the company pointed out. “The Korean market is currently dominated by Samsung Electronics, and we have no plan to enter the market for the time being,” Huawei Korea added, continuing, “The possibility is close to zero in the presence of the subsidy regulations and the supply glut.”
Market research firm Strategy Analytics has recently estimated this year’s sales volume in the market at 26.3 million units, 14% lower than last year’s 30.7 million. The smart phone penetration rate, which is expected to go up to 79.5%, is second to none across the world.
“Even Pantech, which managed to show some performance, is now facing financial difficulties, and this will further deter non-Korean makers from trying to make inroads,” said an industry insider. He went on, “It seems that Apple will be the only foreign smartphone maker in Korea for a long while.”