A market for ``smart'' phones, which allow Web browsing and multimedia on top of phone capabilities, is finally taking hold in South Korea and Sony Ericsson claims it will be one of the biggest beneficiaries.
The company, a joint venture between Japanese electronics giant Sony and Sweden's Ericsson, certainly has the numbers to back its claim.
The decision by local regulators earlier this year to lift a homemade standard specification for data-enabled handsets, called WIPI (wireless Internet platform for interoperability), was supposed to open new opportunities for foreign device makers, who were glad to see the elimination of what they saw as a trade barrier.
However, about five months into the changes, Korea still remains as a mausoleum for companies like Nokia, Research in Motion (RIM) and HTC, who are seeing minimal fanfare for their handsets out of the gate. Breaking through a market dominated by local heavyweights such as Samsung Electronics and LG Electronics is proving to be a difficult challenge.
Sony Ericsson, the world's No.5 mobile-phone maker, has been a rare offshore player that has managed to be relevant. The company sold nearly 24,000 units of its high-end multifunctional phone, the Xperia X1, through wireless carrier SK Telecom over a span of just three months, despite starting out with a hefty price tag north of 800,000 won (about $640).
However, the popularity, which even forced a surprised Samsung to lower the price of its T-Omnia smart phone at one point, came at a cost. The country's notoriously picky tech geeks spent a significant amount of electrons in the blogosphere dissecting Xperia's strengths and weaknesses, with the complaints including slow performance, frequent freezes and poky navigation keys.
And an apparent blunder in the design of Xperia's QWERTY keyboard, which came with an extra semi-colon key, didn't help either.
The experience over the past few months had Han Youn-hee, the head of Sony Ericsson's Korean marketing unit, moving back and forth between euphoria and frustration.
The 50-year-old executive, a lifetime Sony man with extensive experience in the Korean market, is confident that Xperia has earned the respect of Korean users, who are responding to the phone's mobile Internet functions and wealth of entertainment features.
The complaints, he says, are unavoidable as the average wireless user is still getting used to the idea of a smart phone ― a cross between a conventional mobile phone and a computer ― and how they work.
``We can proudly say that Xperia is one of the best smart phones available here ― there is no phone by any other maker that particularly impresses me ― and that there is no technical flaw to the devices,'' said Han in an interview with The Korea Times.
Han said the company is currently analyzing the usage patterns of local Xperia users, and results will influence the company's decision in picking its next device here and customizing its features. He declined to say when the company would release its next handset in Korea, although he added that the company expects to have ``a few'' new phones by this time next year.
Han, a Japanese national of Korean descent, claims that about half of the consumer complaints reported to the company's service centers stemmed from a ``misunderstanding'' of smart-phone functions, such as how the programs work and how they are upgraded through Internet downloads.
``The biggest problem is that Korean consumers have yet to gain much experience in how a smart phone based on a Windows Mobile operating system works,'' Han said.
``I think we have done a good job of marketing the phones, but we need to put in more effort to educate our users on the broad range of data and multimedia features they can enjoy. Xperia is much more than a fashion item. It's not a phone you use for a short time before switching to a new one, but one you can continue to use by downloading new software, like you would do with a laptop.''
Xperia's popularity in Korea can be partially explained by the company's efforts to customize the phone for local users, an area where Sony's experience in the Korean market certainly helped, Han said.
Xperia and SK Telecom collaborated for nearly a year to develop localized programs for Xperia, which include new ``panels'' for the phone's Xpanel home screen, a custom dashboard that allows users to jump from one application to another.
The company also redesigned the phone's QWERTY keyboard to include keys for marks such as "~," "\," "%" and "$," which are frequently used in cyber speech here, although this move eventually led to the trouble over the extra semi-colon key.
Sony Ericsson, through Sony Korea's existing network, is offering more than 69 service centers for Xperia users around the country, which gives them a competitive edge over other foreign companies who are developing unflattering reputations for poor after-service.
Mobile Internet functions were also a key to Xperia's bright start.
SK Telecom, the country's biggest mobile telephone operator with more than a 50-percent market share, is notorious for limiting the Wi-Fi functions on its handsets to force users to rely on the carrier's more expensive data services that charge on a per-packet basis.
However, Xperia was one of the phones that managed to be released with Wi-Fi clearly intact.
``I have to say that the Korean consumers' experience and loyalty to Sony have helped us. When buying the Xperia, Korean consumers seemed to be confident in its quality because the device is associated with Sony,'' Han said.
``Wi-Fi was certainly the Xperia's most distinctive selling point,'' he added.
To further differentiate the Xperia from competing products, Han said the company is considering new ways to source a broader range of quality entertainment content. One idea is to allow Xperia users to watch the latest films from Sony Pictures Entertainment, the company's television and movie studio, from their handsets, without the trouble of lining up at the theaters.
SK Telecom's plans to launch an ``app store'' for its lineup of Windows Mobile-based handsets, which includes the Xperia, the T-Omnia and HTC's Touch Diamond, will also help generate more buzz by allowing users to download cheap or free software from the Internet.
Wireless carriers like SK Telecom and KT moving to ease their digital rights management (DRM) control on the music files played on their handsets will also make Xperia more attractive, Han said.
``Sony products were never about necessity ― the company doesn't have a reputation for refrigerators or irons. But Sony has always been good at finding value in the things consumers would enjoy having, such as the Walkman, which brought the stereo out of the living room,'' Han said.
``This is the point we are trying to deliver through Xperia.''
The Xperia is arguably the sexiest smart phone out there that is not named ``iPhone.'' But now, with KT close to releasing Apple's iconic handset, a decision that may also force its industry rival SK Telecom to follow suit, the Xperia will surely face an uphill battle for the title of most popular foreign phone in Korea.
Many industry watchers are expecting the iPhone to be a quick success, with more than 500,000 units of the iPod Touch, which is basically an iPhone without phone capabilities, already sold here.
The presence of iPhone will undoubtedly influence Sony Ericsson's decision in picking its next phone to sell here.
``I think the buzz generated by the release of the iPhone will benefit foreign companies like us, as consumers will become more accustomed to the idea of having options other than just Samsung and LG,'' Han said.
``Sony Ericsson has a lot of phones that can compete with the iPhone in quality and differentiated functions. The recently released CyberShot camera phone, equipped with a 12-megapixel camera, is among the first that comes to mind.''
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