The local smart phone market is expected to go through an upheaval in the second half of this year as next-generation handsets employing LTE-A, flexible display and smart watches are hitting the market, where the hardware competition has already reached its peak, one after another. Under the circumstances, the average product lifecycle is likely to be shortened to affect the telecom charges of households.
“It is inevitable for us to spend huge money on marketing in the latter half of 2013, even though the government is restricting the consumer subsidies, since a series of new phones are slated to be released,” said a local mobile carrier. The expenditure is expected to be concentrated on LTE-A, or Long Term Evolution Advanced.
Phones Adopting LTE-A and Flexible Display and Smart Watches are on Standby
LTE-A is characterized by its speed up to twice faster than LTE. In Korea, the technology was commercialized for the first time on June 26 this year, when Samsung Electronics launched the Galaxy S4 LTE-A via SK Telecom. The sales volume has reached 150,000 units during the first 14 days in the market.
LG U+, on its part, started its LTE-A service on July 18 with another version of the same model that uses LTE-A for not only data communication but also voice calls. Samsung Electronics is supplying the phone to KT as well.
In the meantime, smart phones adopting plastic OLED display are unveiled in H2 this year, too. Considered as the step preceding flexible display, plastic OLED display is rarely broken unlike the glass panels of existing smart phones because a thin film capsule is manufactured after RGB OLED materials are applied onto a plastic substrate. Industry insiders are predicting that Samsung Electronics will use the technology in the Galaxy Note 3 and exhibit the product in September at the Internationale Funkaustellung (IFA) in Germany.
The development of smart watches is picking up speed as well. Samsung Electronics has recently registered the trademark of Samsung Gear with the US Patent and Trademark Office (USPTO) and the Korea Intellectual Property Office. Its first commercial smart watch product is expected to be available from September or October in the form of auxiliary device for the Galaxy S3, supporting such functions as voice call, text messaging, e-mailing and Web searching.
Burden Likely to Increase on the Part of Consumers
The flood of such innovative new products is likely to increase the financial burden on local consumers though. According to market research firm Gartner, the average smart phone factory price of Korea, US$643.3, is second only to Hong Kong. This can be attributed to the high specifications and prices of the products. It is likely that the launching of the new products will create new demands and further increase consumers’ payment down the road.
“It was just two months ago that the Galaxy S4, the previous flagship model of Samsung Electronics, was released,” said the Citizens’ Coalition for Economic Justice, adding, “The product lifecycle has been shortened from about six months to a couple of months now.” In response, an industry source explained, “The release of new products is no option if we are not to fall behind in the fast-changing IT market and I am sure that the trend is positive because it can contribute to consumers’ rights to choose.”
“It seems that market participants are expecting too much from us,” said Shin Jong-kyun, president of the IT & Mobile Division of Samsung Electronics. The company achieved record high earnings in the second quarter of this year, only to see its stock price sliding nonetheless. His remark implies that how much trouble local smart phone makers have in creating a new growth momentum.