Going Nowhere Fast
South Korea leads the race to bring high-speed Internet access to mobile phones. Japan gets all the credit. Korea's fledgling developers must solve their image problem or die
By ROGER DEAN DU
Jae-Hyun Kim for Asiaweek.
Sinjisoft founder Ko Seok Hoon created world-class mobile game software. But can his firm capitalize on his invention to become a global player?
If great ideas alone were the key to international I.T. success, more people might have heard of Ko Seok Hoon and his company, Sinjisoft. The 32-year-old South Korean computer programmer invented a software platform for mobile phones so advanced that on at least one occasion it has, quite literally, left the competition standing. On a visit to NTT DoCoMo in Japan, Ko's team pitted its little-known system, GVM, against the popular Java platform used by the Japanese giant in its high-end Internet cellphones. Similar kickboxing games were played on two handsets running the rival systems. According to Sinjisoft, the fighter in the game played on its platform was able to twirl, punch and make leaping kicks. The fighter on DoCoMo's Java handset could only punch. "GVM is faster, simpler and more reliable," says Kim Do Shik, CEO of Pocket Space, which produces games for mobile phones.
Ko's nimble software may be a world-beater. But when it comes to turning programming virtuosity into globally dominant products, companies like Sinjisoft are the ones being caught flat-footed. One of hundreds of Korean start-ups developing technology for third-generation (3G) mobile-phone networks, Sinjisoft has had trouble persuading a major carrier outside Korea to back its platform. (DoCoMo is sticking with U.S.-developed Java, despite glitches in recent trials of a fledgling 3G phone service.) Without broad support, Sinjisoft's technology can't succeed.
It's a similar story at almost every level of the country's wireless industry, from software start-ups to major network operators. Korean companies lead the world in many aspects of the technology needed to bring high-speed data services, multimedia and the Internet to cellphones. While DoCoMo's FOMA (Freedom of Mobile Multimedia Access) service launched this month is touted as the world's first 3G offering, Korea has had its own version of 3G up and running for a year. SK Telecom, which has 51% of the country's cellphone subscribers, launched its mobile Internet service in October 2000, followed in the middle of this year by rivals KTF and LG Telecom. Some 1.2 million Koreans are already using high-speed mobile transmission systems.
Critics quibble that the Korean services, which use a different technology from DoCoMo's, aren't true 3G, but an interim solution somewhere between conventional voice networks and full 3G in performance — what the industry calls "2.5G." But with data transfer speeds of up to 144 kilobits a second, the services meet (if just barely) the International Telecommunication Union's definition of 3G. And while mobile-phone companies around the world are delaying their 3G networks due to uncertainties over network content and applications, Korean cellphone users can choose from a plethora of features that include traffic, weather and stock market information, global positioning, music and photo downloads, movie, concert and airplane ticket sales, and Web surfing. Later this year, instructional animation will give golf and dance lessons on handsets. Mobile operator LG Telecom even has a website, www.ez-i.co.kr, offering mobile-phone karaoke.
The head start has created a cottage industry of companies building applications and creating content for high-speed cellphone services. But on the international stage, South Korea's 3G pioneers are invisible, isolated by incompatible standards and inward-looking attitudes. "Sure, Korea is ahead of the pack in wireless," says Greg Tarr, managing general partner at GT Ventures, a Korea-based venture-capital fund focusing on mobile technology. "But in this global world, you need marketing skills and a sense of how the world works. In this respect, Korea has some catching up to do."
There's no doubting the enthusiasm that exists for wireless technology in South Korea. The country boasts about 500 local firms designing everything from games to security solutions. It's a virtuous circle as a broadening user base encourages developers to design new applications for cellphones, in turn attracting more consumers.
In such an environment, you hear plenty of tales of tech whiz kids being seduced by the glamor of wireless and launching innovative start-ups. Take Jang Junho and his software company, Infobank. With an engineering Ph.D. from Stanford University, Jang gave up a steady career at Samsung six years ago to cofound Infobank with a friend. At one point, the company had no money to pay staff and, in desperation, put up Jang's house as collateral to get a bank loan. But as wireless technology has improved, Infobank has cashed in on demand for ever more complex applications. The company supplies software used in three-quarters of all mobile securities trading in Korea and is a leading developer of cellphone-friendly websites, search engines and games. It helped construct www.n-Top.com, a mobile website for SK Telecom, and LG Telecom's popular cellphone karaoke site. Infobank's sales reached $3.4 million last year and are projected to increase almost 40% this year, helping the company break even for the first time.
Despite rapid growth, South Korea's ambitious start-ups may never become full-fledged companies. Not only is Korea a relatively small market offering 3G providers little room to expand, the country's current mobile Internet standard — a souped-up version of CDMA voice technology called cdma2000 1X — is different from the one being aggressively promoted by powerful foreign players like DoCoMo and Britain's Vodafone. That means South Korean companies may be building 3G solutions that won't work on systems outside the country, although developers claim many applications are easy to convert from one platform to another.
Moreover, some say Korean companies lack the skills needed to package and promote wireless services internationally and to cut deals with foreign players. "I've seen Korean companies go to Europe expecting to quickly wrap up a deal," says GT Ventures' Tarr. "Combine language deficiency with an engineer who is doing the marketing and ignorance of that country's culture and way of doing business, and you're looking at a deal that isn't going to happen." Chang Dae Ryun, professor of marketing at Yonsei University, agrees. "Unfortunately Korean businesses are consumed on the domestic scene and don't understand the critical value of global marketing," he says. According to Chang, South Korea this year missed a golden opportunity to tell the world of its fast mobile Internet services. "The carriers should have been advertising in Europe and the U.S. that Korea was leading the 3G race," he says.
There are signs Korean mobile providers are getting better at dealing with the outside world. Some, like game developer Com2uS, are doing what once would have been unthinkable and hiring foreigners. Park Ji Young, the company's CEO, says she had only one thing on her mind when she hired Henry Yeh as chief operating officer this summer: get foreign savvy. Yeh is a multilingual Asian-American. "I needed staff in a high-level position who could smoothly operate in foreign cultures," says Park. Yeh's influence appears to have had the intended effect. Com2uS in August won a contract to supply games to Japanese content aggregator Cybird. Similar tie-ups with Chinese carriers China Mobile and China Unicom, and with Sprint and Verizon in the U.S., look likely early next year.
There have been other wins. Mobile security firm SecureSoft has been winning business in Japan, China and Malaysia as carriers and service providers recognize the need to plug the much-publicized security holes in wireless networks. And Infobank has started providing content and business solutions to a variety of firms in Taiwan and Japan. Cofounder Jang attributes these successes to an open-minded, international outlook. "We've been fortunate to have had first-mover advantage. [But] our ability to communicate with foreigners has also been essential to our success."
Deal-making skills will play a more prominent role as Korea pins its wireless future on the few markets where its mobile Internet standard still has a chance of widespread adoption: China and the U.S. In China, Samsung Electronics has already supplied CDMA equipment to China Unicom, the country's second-largest mobile operator, for second-generation voice networks. Some of these networks are now being upgraded to accommodate high-speed data services — using the more advanced technology in which Koreans are acknowledged leaders.
Whether they can maintain the lead is unclear. The country's two largest cellphone operators, SK Telecom and KTF, plan next year to upgrade their networks using an alternative 3G system embraced by Europe and Japan. The $2.4-billion upgrade will bring South Korea's developers in line with global trends. But it also threatens to nullify the advantage they have built up in the other, less popular technology.
Nevertheless, developers continue to expand the boundaries of high-speed wireless services. Roughly 4% of Korea's 28 million cellphone subscribers use mobile data services, and Internet-enabled cellphones are growing in popularity. In September, their sales outstripped those of conventional mobiles for the first time, accounting for 63% of all handsets sold. Network upgrades ahead of next year's soccer World Cup are likely to attract many more users, as service speed is slated to be increased to up to 2 megabits per second — fast enough for smooth real-time video calls.
Meanwhile, Sinjisoft is feeling the sting of competing with global players. Although its GVM platform is being offered by SK Telecom and it recently got its first overseas deal (with Orange in Israel), rival operator KTF recently started trials of a multimedia service based on BREW, a software platform developed by U.S. giant Qualcomm. Java, the other main rival to Ko's invention, is a product of U.S. tech superpower Sun Microsystems. It's a disconcerting reminder that, in the global scheme of things, Korea's aspirations to wireless stardom face some hefty obstacles.
asiaweek.com |
