Credit Herald

South Korean handset makers Samsung and LG Electronics are scrambling to make up for a late start in a red-hot smartphone market epitomized by blockbuster devices such as the iPhone and the BlackBerry.

The Koreans, who are respectively No.2 and No. 3 in the overall mobile phone market, may have the technological prowess and branding power to take a leap into this fastest-growing segment, but they may have to invest significant chunks of time and effort to become top-ranking global players.

Samsung Electronics this week unveiled new phone models boasting features comparable to Apple’s iPhone as it tries to muscle in on a smartphone market that could grow 10-20 percent this year against an expected decline in sales of traditional cellphones.

“It’s going to be very tough for Samsung to grow share later into 2009 and even more so in 2010 as they’ll face competitive pressure” from smartphone makers, said Avian Securities analyst Matthew Thornton.

“They’ve benefited from weakness at Motorola, Sony Ericsson and Nokia in the U.S. market,” he said. “Now, when you look forward, Research in Motion and Apple both have a full head of steam and Palm is attempting a rebound.”

NOT GLOBAL ENOUGH

The Koreans may also be hampered by a lack of global reach for mobile content and services, vital for smartphones, which are commonly defined as handsets with computer-like capability.

“With services they have a challenge,” said John Strand at Strand Consult. “All those cool things exist in Korea … but you can’t translate it, it’s really Korean Korean.”

Samsung and LG, which together have almost 30 percent share of the global cell phone market, have so far relied on selling well-priced, solid phones with powerful cameras and snazzy keyboards, but little in the way of extra software and content free credit score online.

“The mobile phone market is no longer just about hardware but the delivery of content and services,” said Geoff Blaber at research firm CCS Insight.

“The changing mobile landscape presents big challenges for traditional handset manufacturers. Technology orientated players like Samsung and LG are having to adapt to consumer demand for content and services rather than just handset features,” he said.

Smartphones are expected to post tremendous growth in the coming years, with market research firm Ovum predicting their share of the overall mobile market will almost double to 29 percent in 2014.

But as of the first quarter of 2009, neither Samsung nor LG could be seen among the world’s top-5 makers of smartphones, a category dominated by Nokia, Blackberry-maker RIM, Apple, Taiwan’s HTC and Japan’s Fujitsu.

“Honestly speaking, we are very late,” Lee Ho-soo, a Samsung executive vice president, told Reuters last month. “But we are working hard” to make up for lost time, Lee said, adding Samsung was planning to open an app store in the second half of the year.

Apple’s success with its iPhone, with its intuitive user interface and an application site boasting 1 billion downloads in less than a year, heightened users’ expectations about what a handset can do beyond making calls and taking pictures. 

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