Korean IT Industry Needs to Make Fundamental Changes

      August 17, 2011 13:10

      The world's largest Internet company Google has acquired Motorola Mobility, the mobile phone unit of the U.S. company. So far Google has supplied its Android operating system free of charge to smartphone and tablet PC manufacturers, but now it has gone beyond the software industry and entered the hardware market. Motorola ranks eighth in the global smartphone market, but it is still a formidable force. The company was the first to market a mobile phone in 1973 and has around 17,000 mobile communications patents.

      The smartphone market is divided between Apple's iPhone, which has an 18 percent stake, and Android-based handsets, which control 48 percent. Microsoft, another software powerhouse, has already teamed up with Finland's Nokia and is competing fiercely for a larger slice of the pie. Amid rumors that Microsoft may buy Nokia, we cannot rule out the possibility that the global smartphone market could be dominated by Apple, Google and Microsoft, which all have both OS development know-how and handset manufacturing capability.

      Google has pledged it will not discriminate against other manufacturers to keep Apple in check and claims that its acquisition of Motorola Mobility is aimed at bolstering the ranks of the Android camp. But Korean mobile phone makers, which have focused solely on hardware technology, are now heavily dependent on three U.S. companies that are capable of producing both hardware and software. They seriously have to worry about losing market share.

      Samsung, LG and Pantech have been key partners for Google, which lacked hardware technology, and have increased their share of the global smartphone market. Samsung has become the world's No. 2 smartphone maker after Apple. Korean smartphone exports totaled US$17 billion during the first seven months of this year, up 14 percent from the same period last year.

      But now that Google has the hardware capability of Motorola Mobility, Korean manufacturers finally need to start developing their own software to survive. The first thing that needs to change if they want to survive is the top-down management typical of manufacturing companies in Korea.

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