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IPhone Tries to Crack Korea
Samsung Slashes Price on Its High-End Device Ahead of Apple's Debut
By EVAN RAMSTAD
SEOUL—Apple Inc.'s iPhone on Saturday will finally go on sale in South Korea, a country that prides itself on creating and consuming cutting-edge technology but where the government raised trade barriers on smart phones to protect domestic manufacturers and carriers for several years.
Since the availability and pricing of the iPhone was announced here last week, about 40,000 people placed pre-orders for it and the country's biggest seller of phones, Samsung Electronics Co., slashed the price of its most advanced and expensive phone, a touch-screen model like the iPhone called Omnia2.
Even so, the iPhone hasn't gotten the hype in South Korea that it has in other countries and Apple faces a huge market bias for domestic-made phones, chiefly those by Samsung and LG Electronics Co., which together sell about 90% of the cellphones here.
Since the South Korean government in September exempted Apple from a rule that blocked smart phones, the country's newspapers and Internet message boards have been filled with criticism of iPhone and Apple, questioning the product's quality and company's service after a sale.
"A lot of people here, the Korean media, are very critical of iPhone," says Chin Wonsuk, a filmmaker in Seoul who used an iPhone in the U.S. before moving here last year. "But no one has used it here before. They don't know what it can do."
Apple executives have stayed out of the fray. A company spokesman declined comment except to confirm product specifications and that software will be available through Internet downloads.
A spokesman for KT Corp., the carrier offering iPhone, says it expects the iPhone to sell more quickly than in other countries because Koreans consider cellphones a way to express status and trendiness.
In Japan, Apple experienced a slow ramp-up of sales after the iPhone became available two years ago. And in China, where Apple last month began selling the phone, sales have been slow due to modifications the company made at the government's request and the existence of a massive gray market.
South Korea for a nearly a decade has been able to boast one of the world's most advanced cellphone systems, with three carriers offering fast service everywhere, even in subways and remote mountaintops. Samsung and LG grew to become the world's second- and third-largest cellphone makers, respectively.
But South Koreans pay the highest prices in the world for cellphones and among the highest for wireless service. The average selling price for Samsung and LG phones is nearly twice as much in South Korea as it is outside the country.
The iPhone is already changing the pricing dynamic. KT will offer three iPhone models under monthly usage plans with charges ranging from 45,000 won to 95,000 won, or about $40 to $80. Depending on which plan is chosen, the iPhone's price ranges from $342 to free.
Samsung responded this week by making its Omnia2 phone free for people who buy an $80 monthly plan on SK Telecom Co., one of KT's rivals. It cut the $900 price on other plans to around $300.
Kim Beom-suk, a public relations executive in Seoul who has long said he wanted an iPhone, now says he may get an Omnia2 instead. "Compared to just last week, the price of Omnia is about half," he says.
The iPhone's arrival will also end the control that South Korea's cellphone makers and carriers, including KT, have had on the software that runs on phones. Applications for iPhone will be available through Apple's online service or directly from software makers.
"The most appealing part of iPhone is the variety of applications," says Lee Jae-gon, a Seoul businessman who pre-ordered one. "In the case of the domestic phones, you only use programs that are pre-installed on them."
Some Korean software firms and media companies already provide applications that South Koreans use on Apple's iPod Touch but that will also work on iPhone. A major broadcaster, MBC, provides one that allows reception of its radio broadcast and a Web portal company, Daum Communications Inc., provides one that offers clips of Korean TV shows.
"I think misinformation about the iPhone by some of the domestic press backfired because people already knew about the apps through iPod Touch," says Lee Sung-jin, a steel company worker who is known as South Korea's first iPhone user because he bought one in Australia in July and personally paid for its technical review by Korean government regulators.
—Jaeyeon Woo
contributed to this article.
Write to Evan Ramstad at evan.ramstad@wsj.com
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