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Korean Cell Phones Make Noise in Global Markets
South Korean mobile phone makers are looking to further solidify their footage in the global markets this year, putting a flurry of milestone achievements of 2004 behind them.
Samsung Electronics outpaced Motorola during the third quarter of last year to become the world's second-largest handset provider, according to the U.S.-based Gartner Dataquest.
Samsung's local rival LG Electronics bested Sony Ericsson for the world's fifth spot and Pantech Group also made their presence felt by substantially hiking their exports.
One out of every four handsets shipped last year was made by the Korean big three as they are projected to sell a total of 1.52 billion phones in 2004, accounting for 24.2 percent of the global market at 6.4 billion units.
As a result, handsets gained the prestigious title of Korea's leading export item for the first time in November by surpassing semiconductors, which has been the nation's top seller overseas since the early 1990s.
Dongwon Securities analyst Greg Roh expected the market share of the three giants will approach a 30-percent plateau this incoming year on the assumption they will combine to sell 2 billion handsets in the 7-billion world market.
But not all local phone makers are entitled to celebrate as a crop of mid-tier companies languished to make the numbers last year in the competition with the above-mentioned titans and their troubles are unlikely to ebb anytime soon.
Some middle-of-the-pack performers like Sewon Telecom and Telson Telecom even collapsed and filed petitions for court receivership, amply demonstrating the stark polarization.
Samsung is estimated to roll out a total of 87 million handsets in 2004 for a 56.8-percent jump compared to 56 million units in 2003, according to Dongwon's Roh.
Especially during the July-September period, the outfit sold 22.98 million mobile phones, nudging past perennial runner-up Motorola's 22.39 million units.
Samsung is currently only trailing runaway leader Nokia, which carves out more than 30 percent of the world market, and looks to jack up its sales by double digit percentages to 100 million this year.
LG Electronics also spent a banner year with the entity likely to swell its annual sales 62.6 percent year-on-year to 44.6 million units by the end of last month.
The cash cow of LG Group, Korea's second-largest conglomerate, expanded its reach in the third-generation phones like wideband code division multiple access (W-CDMA) models.
The firm surprised the telecom industry by winning a big contract of supplying 3 million W-CDMA phones to Hutchison Whampos, the top business group of Hong Kong, in the past May.
Earlier last month, LG said it would ship 3G handsets to Cingular Wireless, a major mobile service provider in the United States, in the second half of this year.
``We look to take about a half of the world W-CDMA market next year (2005) by selling 6.5 million phones,'' an LG Electronics spokesman said.
Pantech Group, composed of Pantech and Pantech & Curitel, was in pace to chalking up 70-percent growth last year by selling 20 million phones.
The year 2005 will be brighter for the latecomer as shown by its December contract of exporting 10 million cell phones worth $1.6 billion to U.S.-based distributor Audiovox Communications.
On the back of the mega deal, Pantech aims to storm into the ranks of the world's top-five players in 2005 by shipping 25 million units with its own brand.
Up until now, a big chunk of Pantech products have been exported under the original design manufacturing (ODM) system, limiting its brand power, however, the firm will mainly use its label from this year.
The term ODM refers to the makers, typically newcomers, that sell their merchandise under other brand names.
Gadgets With Killer Applications
The biggest factor behind Korean makers' huge success would be their strong product line-up, which have won the hearts and minds of the global customers based on cutting-edge technologies.
Samsung, LG and Pantech have staged an uphill battle to churn out compelling phones, making Korea a hot bed of futuristic models that should also help boost the firms' performance this year.
Included in the top-of-the-line phones that have hit store shelves are models with functions such as megapixel cameras, broadcasting, music players, walkie-talkies, healthcare and security.
In fact, MP3 players and high-resolution cameras have already become a must for the newest feature-rich models, which sport a slew of killer applications.
As an example of Korean manufacturers' sharp competitive edge, Samsung developed the world's first 5-megapixel camera phone in October.
With the high-end handset, which started to go on sale a month later, Korea finally outpaced Japan in the rivalry over pixel counts.
LG unveiled a host of health-care phones last summer, including a diabetes phone. It is equipped with a microchip that can measure the human body's glucose, keeping the handset owners informed of the status of their blood sugar.
The two companies also took the wraps off the so-called satellite digital multimedia broadcasting (DMB) phones, which will launch its commercial service in the upcoming May.
The phone enables people on the move to enjoy seamless video, CD-quality audio and data through handheld devices or in-car terminals.
Pantech has countered its two larger rivals by coming out with a three-axis sensor phone, a fingerprint-recognition phone and a three-dimensional game phone.
The three-axis sensor phone helps people on the go check their speed, distance traveled and calorie consumption, as well as altitude when climbing mountains.
``The three firms will be sure to turn out lots of attractive gadgets this year, which will help underpin their global status. I hope to witness what killer gizmos are down the line,'' Criss Chun, an analyst from Meritz Securities.
Dark Side of Business
On the flip side of the industry, however, mid-sized cell phone firms have struggled to find their feet in 2004 with several of them suffering a meltdown.
For last year alone, Standard Telecom, Sewon Telecom and Telson Telecom went under and applied for court receivership or court mediation.
They chalked up an impressive growth by selling low-end mobile phones to the Chinese market in the early 2000s but the cutthroat price-cutting blitz in the Middle Kingdom cursed them to the relentless slippage.
The government has tried to step in, having met with the nation's beleaguered cell-phone makers but it has yet to lay out any notable rescue plans.
As a basic reason behind their free fall, market observers picked the firms' lack of financial sources, which are needed to make compelling new phones.
``Mid-range makers cannot afford the luxury of pumping big bucks into research investment, which means they will eventually lag behind in developing fancy phones,'' Chun said.
Chun put a negative spin on the stiff polarization trend, which he expected will continue this year, and added that mid-sized makers are required to hit on all cylinders to carve out a niche in the market.