Melbourne -- Korean handset players' global competitiveness has improved dramatically, underpinned by their understanding of consumer demand and their flexible yet cost-effective multi-platform strategies.
"Strong design capabilities have allowed vendors to exploit the trend to focus design on intangible factors, even in lower-tier segments", said William Lee, Senior Analyst based in Seoul. "This has been reinforced by technical leadership in new hardware elements such as high-pixel cameras, multimedia features, and screen size. And also Samsung and LGE were first to market with touch-screen handsets, though it was the iPhone that initiated mass take-up".
Moreover, the adoption of a multi-platform strategy by the Korean operators has made it easier to collaborate with operators and other members of the ecosystem. At the same time, collaboration with component manufacturers has allowed vendors to keep the costs of a multi-platform strategy down.
"The booming Smartphone market could be an opportunity for SEC and LGE, and Niche market has expanded due to Apple being held in check by operators but there are some critical challenges Korean handset manufacturer need to overcome", comments Lee. William Lee lists the challenges:
Adherence to the multi-platform strategy
Korean company and global player Telcos are putting added emphasis on the model lineup built on the Android platform to rival iPhone. Obviously, the expanded base of Android and its potential for growth justify the speculation that its demand will surpass that of iPhone within the next five years. Note, however, that users who have been familiar with the model based on other platforms since time immemorial are unlikely to rush into other platforms. In other words, since enthusiasts of each platform - Symbian, Windows mobile, Blackberry, Iphone, Android - will help capture a considerable market share to some degree, there is a need to develop the model based on Windows mobile other than Android and the model linkable with several killer apps, albeit based on the feature phone platform. (There are a plethora of applications on the Smart phone, but not many killer apps are used very often during the lifetime of the handset.)
Realization of various portfolios of low-end smartphone model lineup
Just as various product portfolios were built by usage pattern or spectrum of user on the feature phone before the smart phone market began to expand fast, so will the usage pattern of the smart phone and user spectrum be diversified even in the low-end sector of the smart phone; as a result, the product portfolio by price (specifically in the low-end sector) must be built in various ways. For that, each target user segment must be approached on the basis of lightweight feature through selection and concentration from the standpoint of SW and HW and from the perspective of cost.
Product development and user interfaces
In the feature phone segment, SEC and LGE have improved their interface scheme. However, in the high-end segment (including smartphones) their interfaces are still perceived to lack consistency and intuitiveness. The recently launched bada OS platform by SEC is also perceived in this way. Even though bada meets high-tier specifications in respect to support for app stores, GPS, and even Flash, it has been criticized for its inconsistent and inconvenient graphic user interface. SEC and LGE must both address this issue in order to make globally competitive products
Strategic partnership with operators and platform providers
As the value chain in the mobile ecosystem has changed, SEC and LGE need to consolidate their existing partnerships and expand into new markets. They must not be outmaneuvered by companies such as Apple, which has set up a new role as application provider in the mobile ecosystem, and new mobile business stakeholders such as Google and Nokia, which are moving beyond their traditional business into handsets. And co-development of B2B apps through partnership with corporate solution providers is worth consideration.
Role in the mobile ecosystem
SEC and LGE need to develop killer mobile services featured only for SEC or LG which have competitive and similar points with RIM's e-mail and Apple's Appstore. In order to build their own product identity with development of killer mobile service on the device based on collaborative partnership with other stakeholders such as Application provider, contents provider etc, OVUM believes that SEC and LGE should give attention to secure their initiative, consolidating and distributing each role of business stake holders in the mobile ecosystem. That is, in order not to remain as a follower, they need to create a business model with an innovative strategy.
SOURCE: OVUM