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[KOREA REPORT] Massive Explosion of Apps Market2011-11-29Hit:8400

[KOREA Report] Massive Explosion of Apps Market
As always, we begin with our Cutting Edge segment. And today our focus is on the the smart phone application market, now expanding at an incredible pace that"s it"s almost impossible to catch up. There"s even a study that shows, by 20-15, the number of downloads will top 100 billion. Which is why we"re seeing a gold rush so to speak, among individual app developers and big-name companies right now. Let"s find out more about the competition in Korea.
South Korea boasts one of the world"s fastest take-up rates of smartphones. 4 out of 10 people here are smartphone subscribers and the total number of users exceeded 20 million as of the end of October. And such rapid boom in smartphones is leading to a massive explosion of the application or the apps market.
According to experts, application downloads by Apple"s App store users and Google Android users are expected to jump a whopping 3 fold by the end of this year to… 25 billion.
[Rhie-Young Lim / SBS CNBC : not just apps developers but wireless operators are also jumping into the apps business. And it"s really a difficult playing field given that local operators have to compete against global open markets. and countless new apps are trying to take over the old goodies]
Currently, Samsung"s Galaxy phones and Apple"s iPhones are mired in a neck to neck competition. But it"s a different story for the apps market. Apple"s app store is by far advancing the rest in terms of both the number of appsnd the revenue generated from them Some say this is because Samsung prioritized on developing its handsets and driving sales than focusing on its apps.
[Chang Dae-Chul / Professor, KAIST : South Korean players were a laggard in the apps market, because they were slow to adapt to smartphones. Plus, their strategies were more focused towards hardware than software"]
But experts say Samsung"s rapid sales in the smartphone business could ramp up its" growth potential in the apps market.
[Kim Hwe-Jae /Analyst, Daeshin Securities : Samsung"s flagship product Galaxy S sold like hot cakes globally. It may have been a tad late in launching apps...but if there"s more exposure Samsung"s app store will be able to grow significantly like any other apps store.]
And leading the apps market are not big corporate names like Samsung and LG, but startups specializing in this particular business.
One perfect example of this is Kakaotalk. This mobile app allows free group messaging for iPhone, Android and Blackberry.
[Lee Soo-jin / Communications Dept, Kakaotalk : Kakaotalk is not complicated to use. You can use it automatically once your phone number is saved. Its" free of charge and your phone contacts will be added straight to your friend list on kakaotalk. This, we believe, is our strength.]
Kakaotalk knew demand was coming. And more than 30 million users spread out in over 200 countries are loyal users..the 600 million messages exchanged every day are clear feats of Kakaotalk"s free buzz marketing.
This service is rocking the charts in Kuwait and the United Arab Emirates as well, taking no.1 spot as the single most downloaded app. It also took the top spot in a poll by the U.S. tech media website CNET as users" favorite free application.
[Lee Soo-jin / Communications Dept, Kakaotalk : These mobiles are always in one"s hands. And people have an urge to be connected with someone anywhere anytime. I think that"s why more people are using Kakaotalk.]
But whether Kakaotalk will be able to keep up the lead is a question mark. Apple is already allowing a free tex-messaging service between iphone users.
Plus, handset manufacturers like Samsung and LG along with online chatting networks like Nate on and even telecommunication firms are fast joining the mobile messaging market.
[Kim Hwe-Jae / Analyst, Daeshin Securities : Its" good that Kakaotalk took the lead but its needs to incorporate more services because entry barriers are low for these mobile messaging services.]
Korean apps are also making it big in the Japanese market. Local apps focusing on language, education and games have recently topped the charts.
And some these "made-in-Korea" apps have become popular in the U.S. as well. Cubro, which is a photo software app by Jelly Bus recently came in as the top application in 16 countries including Japan and the U.K.
Ensight Media"s Radio Alarm clock application, which offers more than 45 thousand radios, alarm and sleep timers in 5 versions topped the heap in the music.
In the meantime, Gamevil, a mobile game company, is one notable example of an apps developer that proved these apps can be profitable and not just popular.
Its Zenonia series were the country"s first to come in no.1 in terms of real time revenue at an oversas apps store.
[Kim Jin-young / MARKETING, GAMEVIL : Captivating plots, graphics and pictures optimized for smartphones, and various contents, are why this is so popular among users in and out of the country.]
Gamevil"s third quarter revenue hit 8.9 billion dollars... and 7 billion dollars of that came from its apps division, which is a startling 497% jump from last year.
While most apps depend on mobile adds, gamevil took a different approach to boost its revenue.
[Kim Jin-young / MARKETING, GAMEVIL : Gamevil"s profitability is based on two models...One charges a fee while the other "Free to Play"model only partly charges. At first the games are free to play, luring users, and then items are sold bringing in profits.]
But Kakaotalk is still looking for ways to tap into a consistent revenue stream. Kakaotalk has recently clinched a deal with pop stars and companies that are in need of marketing. Then the two parties formed a "Plus Friend Service,“ which is eventually set to trickle in some profits.
[Sanghwan-Jang/ Plus Friend Director, Kakaotalk : The Plus Friend Service is still at a testing phase but we"ve had a flood of inquiries from companies and medias. We think this could eventually bring us profits.]
One trend note, is the recent influx of telecommunication networks into the apps landscape.
The country"s leading wireless operator SK Telecom is quickly taking over the local apps market by launching a subsidiary called SK Planet.
[Jin Heon Kyu / Manager, SK Planet : SK Planet"s Tstore managed to beat Apple"s app store in download numbers. Sales are also estimated to have topped that of Google"s Android market.]
KT Olleh Market, which joined the bandwagon, a year later, is also growing at bullet speed.
[Kwon Young Min / Smart Eco Manager, KT Olleh Market is KT"s open market, which owns around 550 tousand digital contents including music, videos and apps. In the last half an year, the amount of transaction has jumped 6 fold and subscribers have tripled.]
But there"s still a lot of catch up to do. 84.7% of the domestic market is still take up by Apple"s app store and Google"s Android Market.
Which means. apps provided by the country"s 3 telecommunication companies only account for about 15.3%
But SK Planet and KT are also looking at overseas to ramp up sales in a bigger pool.
KT recently launched OASIS which is an apps linking Korea, China and Japan.
KT handpicks apps in the Chinese and the Japanese market then translates and authorizes them to debut on the other markets.
[Yang Seung shik / KT : We"ve seen more than 5 million dollars since KT debuted in china and Japna.
We are looking for more ways to support the local apps developers so that they can succeed even more overseas.]
SK Planet is also stretching its wings in markets like Taiwan, China and Japan.
[Kim Hye-Jae / Analyst, Daeshin Securities : Google jumped in a market where Apple was predominatly monopolizing. Then, telco companies started to join the bandwagon. According to a research institue, the mobile apps market is set to reach 58 billion dollars by 2014.]
[Rhie-Young Lim / SBS CNBC : Apps developers are gunning to ride on consumer"s urge to carry over what was on their previous PCs to their smartphones, tablet PCs and even smart TVs. And we are seeing a silent yet a fierce competition brew in this space.]

Contact : Lee, Sohyun ( sohyun.c.lee@kaist.ac.kr )