A director of Korea's top search engine operator NHN said last month that the iPhone is a "trigger" for mobile Internet in Korea. The remark underscores the impact that the small gadget is having on Korea's IT sector.
Korea has touted itself as an IT powerhouse, but it has lagged behind its advanced peers in terms of mobile Internet partly because of expensive wireless data services and lack of dominant smartphones.
But the rollout of Apple's iPhone in late November is expected to spur the growth of mobile Internet in Korea by driving the popularity of smartphones, which are computer-like devices that allow users to surf the Internet, as well as downloading content and software from the web.
"The local mobile Internet market is on the verge of exploding," said Denny Kim, an analyst at Eugene Investment & Securities.
"The second Internet revolution is coming to Korea."
Research firm ROA Group Korea predicted that smartphone sales would more than triple to 1.85 million units in 2010, compared with 500,000 units last year. That would make up nearly 10 per cent of total handset sales in Korea.
"It would not be an exaggeration to say that 2010 is the year in which the revolution from feature phones to smartphones will take place," ROA Group Korea said in a report released last month.
"This is can be seen as part of the ripple effect of iPhone's launch."
The rise in smartphone users will increase wireless traffic, which will contribute to pushing up the value of the market to 4.6 trillion won (US$3.9 billion), up 12 per cent from last year's figure, according to a recent report from Hyundai Securities Co.
Mobile Internet is expected to offer new growth opportunities for not only wireless operators and handset vendors but Internet companies and content providers, all of which are competing to grab a bigger piece of the mobile Internet market pie.
Operators have expanded their smartphone lineup and introduced competitive data plans, hoping to boost mobile data traffic. This will generate new income sources for carriers, which face slow growth in traditional voice business.
SK Telecom, the top mobile carrier, is planning to nearly triple the number of new smartphones to 16 from last year's six, according to a company official. Second-ranked KT also intends to bring out 10 new smartphones while the smallest, LG Telecom, is said to be planning to add five or more smartphones to its lineup.
Along with expanding the smartphone lineup, carriers have also put together package payment plans that offer cheaper data rates, allowing users to access wireless Internet services at relatively low costs.
In particular, a series of Android-powered smartphones are expected to be rolled out by Samsung, LG, Pantech and Motorola this year. Currently, most smartphones sold here run the Windows Mobile operating system, which is losing ground over Android.
Handset vendors see a big opportunity in smartphones, given their higher profit margins and faster sales growth than other phones.
Not only the mobile industry, but content and Internet firms also seek to cash in the potential expansion of the wireless Internet market in Korea.
Leading search engines such as Naver.com and Daum.net are bolstering mobile services to increase mobile traffic, which would translate into a rise in advertising revenue.
Content providers such as game companies and music firms saw their shares soar in the past couple of months on market expectations that they could benefit from the boom of smartphones, which allow users to download music, games and other content and software from online application stores.
The government has also thrown its weight behind mobile Internet services.
The Korea Communications Commission said last month that it aims to stimulate the growth of wireless Internet in Korea as part of its plans to create the "second Internet boom."
One of the main tools both government and industry are using in their efforts to boost wireless Internet in Korea is the smartphone. The KCC plans to encourage carriers to offer more smartphones through various policy measures with the aim of raising the proportion of new phones accounted for by smartphones to 24 per cent in 2010 from 14 per cent in 2009.
"Smartphones are important because users must first have devices capable of accessing wireless Internet networks if such services are to take off," a KT Corp. official said.
"There are other portable devices that can access wireless Internet networks, but unlike a smartphone, which has the functions of a computer, other wireless Internet-capable devices have limited applications."
