KOREA: Seoul to host $10 mil. Google R&D center
Senior Vice President of Google says company is dedicated to Korean market
Korea Times
Tuesday, October 10, 2006
By Kim Tae-gyu
Google, the world's primary Web search engine, yesterday signed a memorandum of understanding (MOU) with the Korean government to set up a research and development (R&D) center here.
Under the agreement, the U.S.-headquartered Google will spend at least $10 million over the next two years and hire more than 130 researchers for the R&D lab.
However, the investment could be much higher according to Google Senior Vice President Alan Eustace, who flew to Seoul to take part in the MOU signing ceremony.
"The Google R&D center in Korea enables us to recruit local computer scientists to further develop innovative search technologies for Korean users and users around the world, Eustace said.
"It (investment total) will depend on our performances later. But $10 million is a low expectation. Our expectation is high," he added.
Google runs research centers in many overseas countries such as Britain, Israel, Japan, Norway, Switzerland, India and Russia apart from its headquarters in Mountain View, California.
An R&D lab with 100-plus researchers is considered top-class.
Eustace said the nuclear test conducted by North Korea Monday did not affect its investment decision. "We are committed to Korea and the market," he said.
Google planned to build an R&D center earlier but it was delayed as the company searched unsuccessfully to find a local representative.
Sources say Google has interviewed dozens of Koreans over the past several months to find a Korean boss but has yet to designate one.
Market responses
The R&D center signals a full-scale attack on the Korean market by Google, which has failed to make major inroads here since it arrived in 2001.
However, investors seem unfazed by Google's move as shown by the strong stock prices of NHN, Korea's dominant Internet company. NHN is the Korean company that would be most affected by a successful Google expansion here.
The NHN share price rose by 0.22 percent, or 200 won, at the tech-filled KOSDAQ market. This contrasts to the market's reaction of 10 months ago.
At that time, on Jan. 11, the stock price of NHN plunged 3.14 percent, or 9,900 won, on the then-unconfirmed news that Google would set up an R&D center here.
Market observers point out investors believe the planned center will not change the landscape of the overstuffed and competitive Korean search market.
"Google is famous for canvassing the Internet fast to give relevant search results in a flash, but the problem is that the firm lacks a Korean-language database," said Wane Lee, an analyst at Woori Securities.
"Unlike foreign cultures, Korean portals are reluctant to open their databases to other search robots. As a result, Google's search expertise is of little use here," Lee said.
Lee added Google will only be a competitor in Korea if the search giant takes over local Internet companies, which have a wide range of Korean-language databases.
Google accounts for about half of the global search market but the company's market share here has been less than 2 percent.
The country's two top Internet enterprises also appear to be unconcerned about the R&D center.
"Why do you think Google has suffered setbacks in Korea? The reason is that Google failed to provide services customized specifically for Koreans," NHN chief executive Chae Hwi-young told reporters last month.
"In fact, Google cannot offer optimal search services to Koreans since its search engine has a global logic that cannot be specially adapted for Koreans," Chae said.
Jody Chung, a spokeswoman at the nation's runner-up Internet firm Daum Communications, concurs.
"Google is best at Web page searches but it falls behind when it comes to meeting the complicated needs of Korea's tech-savvy Internet users," Chung said.
"In addition, Google lacks all-important content for Koreans. So I am skeptical as to whether Google can make a stir with its research investment," she said.
Date Posted: 10/10/2006 |
