Korea's basic and key parts industry technology remains at a lower level than that of advanced countries such as Japan and the U.S., according to several think tanks despite the fact the nation is called an "IT Powerhouse." Industry experts pointed out that the industry's excessive inclination toward applied technology, despite its outstanding technological expertise, is resulting in skepticism toward such technology.
In this situation, there have been a number of domestic IT enterprises that have gradually developed source technology and been recognized in global market. In particular, mobile industries such as mobile telecommunications and wireless Internet networks hold source technology in the sector. The LCD and Internet security sectors are also busily developing it.
Mobile Industry Actively Developing Core Technology
Neomtel, Thin Multimedia, Reakosys, Sinjisoft, Infraware, IntroMobile, Telcoware and Digital Aria are among the domestic IT companies that developed source technology. In fact, they developed source technology ahead of any foreign rival, have led the global industry, and earned significant sums in technology royalties. The vast domestic mobile telecommunications market, dubbed one of the largest in the world, has provided solid foothold for them. At the IT exposition, SEK 2004 held in June, Neomtel, Thin Multimedia, Reakosys, Sinjisoft, IntroMobile, Digital Aria and IntroMobile operated a joint Korean Source Technology Pavilion to promote their technologies. They plan to inaugurate the tentatively "Source Technology Council" for joint promotion of their products.
They are ittle tigers' that have succeeded in developing core technology in newly emerging markets with high growth potential like wireless Internet and mobile game sectors. They are recognized more widely in the overseas markets and have generated huge amounts in technology royalties.
In this connection, Neomtel receives royalties from Qualcomm and Motorola for its video compression technology. Its income from royalties accounts for more than half of its total revenues. Last year, its technology was bought by China Mobile, the largest mobile telecom company in China, and adopted for standard devices. Sinji Soft developed the world's first wireless Internet download solution in 2000, General Virtual Machine (GVM). GVM is a source technology that transfers Internet contents through wireless Internet networks.
The solution is installed in 18 million mobile phones domestically, is also exported to Israel and has been successful in numerous commercial applications in European GSM telecom networks. The company expects its royalty income to reach $1.3 million (approximately 1.5 billion won).
Multimedia messaging system specialist, IntroMobile is another small giant commanding 70 percent of the world's CDMA solution market. The company exported its MMS (multimedia messaging service) to huge mobile operators such as Sprint of the U.S., Verizon Wireless, Vivo of Brazil and Telstra of Australia. MMS is a solution that enables images, moving pictures, music and voice to be attached to messages. Thin Multimedia has supplied its next-generation mobile video compression solution, H.264 Codec, to Qualcomm of the U.S. Qualcomm applied this solution to its 'Qtv video solution' as well as to seven mobile operators in four countries. Reakosys has exported its mobile 3D engine solution to China Unicom. It is registered on the Texas Instruments video solution ODM (original design manufacturers) list, the only company in Asia.
Digital aria (CEO, Jang Duk-ho) is exporting its flash animation solution, obile Solution" while Infraware (CEO, Kang Kwan-hee) is exporting Web browsers for mobile phones. Telcoware is supplying core network solutions and wireless data solution to domestic and foreign mobile telecom operators.
Investment Focuses on Competent Technology Sector
Vast investments into technological development in the mobile field, Korea's strong suite, have resulted in the domestic industry becoming a global leader.
Mobile solution markets have the growth potential to expand 10-fold over the next 10 years. Mobile games and characters as well as mobile telecom are included in this segment. Actually, efforts have been made to secure core technology in such IT industries as biological recognition, voice recognition and search engine sectors but few companies have succeeded. Korea has experienced huge trade deficits in the technology balance.
According to a report by the Korea IT Industry Promotion Agency (KIPA), the IT industry achieved export growth of 60 percent annually during the 2000-2002 period, and managed to achieve an expansion of 25.9 percent in 2003 despite the computer export slump. However, exports of basic IT technology including source technology remained very low.
Leadership in Home Market Becomes Base for O'seas Advance
Most domestic wireless Internet solution providers holding source technology have grabbed dominant shares of the home market as a prelude to turning their eyes overseas.
Neomtel's mobile multimedia solution, SIS (Simple Image Solution), that the company developed in 1999 has been adopted as the standard mobile graphics format by the Korean wireless operators, SKT, KTF and LGT. Its VIS (Vector Image Solution) unveiled in 2003 was commercialized this year and adopted by SKT and LGT.
Reakosys supplied its mobile 3D engine for Samsung Electronics' SPH-S9300 phones last year, and added LG Electronics to its client list. SKT will adopt its solution in all of its giga-class of mobile phones. Infraware, one of the few WAP (Wireless Application Protocol) browser suppliers in the world, developed its own Embider v4 last year. It was selected as a service solution by SKT and LGT, elbowing out competitors Nokia and Open Wave. Having been compatible with KTF's own browser, KUN, Embider is the leader on the domestic turf.
Sinji Soft, Telcoware and Thin Multimedia have almost monopolized mobile solutions supplies to domestic mobile operators. Based on their success in the domestic market, the wireless Internet companies have pitched up their overseas drives into the U.S., Japan, China and Europe. Industry observers said that overseas markets, not the domestic arena would be the competitive venue for IT enterprises possessing core technology.
