Qualcomm Inc (QCOM)

[khemara_qc]

South Korea: High-tech hothouse (II)


"Korea is only 4 percent the size of China, but it has a leading IT infrastructure," said M.C. Kim, general manager for Intel Korea. "It is a good place for a test bed. Once it is developed, it can go easily outside."


The idea of selling more upscale consumer electronics also took root during this time, with a particular focus on the export market.


The South Korean government plays a fairly active role in shaping the direction of industry, though it has begun to resemble Washington in its approach toward business since recovering from its economic crisis. The country invested directly in companies in the 80s but today mostly encourages development by funding research and creating incentives.


At the same time, South Korean officials often appear more technologically savvy than their Western counterparts. For example, the Seoul government has begun a $7m (£3.85m) pilot for open-source software Linux in its offices -- a decision that came directly from the top.


"The president made orders on this himself," said Daeje Chin, the chief minister of the Ministry of Information and Communication and the former president of Samsung Electronics.


The public beta nature of South Korea's technology consumption can be seen most vividly in cellphones. The replacement rate on phones runs an estimated six to 18 months. Competition among manufacturers to bring a new model to market is intense, companies say.


As with all beta testing, some ideas flop. One service that failed was video over cellular networks that cost $260 to watch a 90-minute programme. The cell phone as TV remote control and handheld videoconferencing have not fared well either.


The phone itself, however, has become a powerful e-commerce tool for South Korean services that are only in the test stages in Europe and North America. Many people get on the subway or settle bills in restaurants by swiping their phones through payment machines. This summer, a bank will start to let customers transfer money between accounts using their phones.


"In 1995, (Microsoft chairman) Bill Gates was talking about wearable computers, but I don't think that people realised then that it would be the telephone that would do these functions," Qualcomm's Park said.

The mobile revolution is a step ahead in South Korea, where cellphones are ubiquitous and sport many applications


The increasing popularity and performance of handheld devices may soon transform the digital camera industry as well. Two-megapixel camera phones will come out this year, followed by 6-megapixel cameras in 2006. But several South Korean and US executives have said the true killer app for cellphones could be video on demand.


"The cellphone market (in South Korea) is quite advanced. It is six months or a year ahead of the rest of the world, so when you go out to the rest of the world, you have the most advanced products," said Sauk-Hun Song, a principal analyst at research company Gartner. "Koreans, especially young people, adopt services very quickly."


The lifestyle changes that have accompanied South Korea's technology revolution also have helped make the nation a lab for examining the societal impact of the Internet. Historically, South Korean media outlets have skewed the news to fit the views of the government or their owners, a situation that the digitally connected populace is changing.


Earlier this year, the National Election Commission offered bounties to individuals who could provide evidence of campaign bribery, a chronic problem in a country where politicians have been known to pay for support and receive crates full of money from large organisations. (The average apple box can hold 100 million won, or about $85,000, and is reputedly the preferred container for delivering payments.)


Working with cellular carrier KTF and Web portal Naver, the commission began a mobile tipster programme that encouraged people to send in photos for immediate publication. Several citizens received $5,000 bounties for pictures of money changing hands in suspicious circumstances.


The reforms appear to be working: In the April 15 election, 2,084 people were criminally booked and 508 were prosecuted.


Reports of improprieties have not been confined to politics. One cellphone photographer caught a teacher hitting a student at a time when corporal punishment was embroiled in national controversy.

The country's dominant conglomerates, called chaebols, also are feeling the pressure to change. Politicians are calling for reforms of the chaebol systems, under which subsidiaries have traditionally offered discounts and other advantages to sister companies. While chaebols such as Samsung and Hyundai helped build the country, critics say their pervasive influence discourages start-ups and fair competition.


"We're trying to promote clean accounts and stop internal trades," said Sang-kyoo Choi, director of the International Cooperation Bureau of the Ministry of Information and Communication. "The chaebols can't enjoy the same benefits they did a few years back."


The reform-minded attitudes taking hold in the country are not likely to wane anytime soon among younger generations, because technology also is being used to improve South Korea's education system. In April, the country's public TV network began to Webcast free tutorials to help students prepare for the national aptitude test, Korea's version of the SAT.


High school students attend classes and often study past midnight to prepare for the testing season in November, which is a time of national anxiety. In the first Internet trial, 100,000 simultaneous streams were Webcast.


"We opened up a new use for the Internet," the Information Ministry's Chin said. In Korea, private tutoring is a huge financial burden on parents, Chin said.


Younger South Koreans have contributed significantly to the development of commercial broadband services as well, teaching communications companies that network speeds are not the only feature that subscribers look for. Cyworld, for instance, has become popular by offering personal blogs with "avatars," or icons that represent the user.


The site, which is part of the SK Telecom empire, had about 3 million visits a day in the third week of May alone, according to Rankey.com, a local tracking service. As of February, it had 6 million registrants, up from 3 million in May 2003.


Basic services are free, but consumers can enhance their avatars with virtual shoes or designer clothes and cars for fees ranging from 50 cents to $5. And nearly everyone does.


"In North America, most of the carriers' attitude is to consider their service as a utility," said Eric Kim, executive vice president in charge of global marketing at Samsung. "They talk about price per minute. They aren't talking about lifestyle."


Mike Siu of ZDNet Korea contributed to this report from Seoul.

http://insight.zdnet.co.uk/hardware/emergingtech/0,39020439,39158502-3,00.htm