Can iPhones Revolutionize the Korean IT Market?

Korea is weak in computer software despite being a world information technology powerhouse, mainly because of illegally copied software accounts for 43 percent of all software.

The country is a good manufacturer of cell phones but gets its software from other countries. Korean TVs are world-class but most Koreans watch American dramas on TV.

Apple’s iPhone, however, is changing the Korean software industry because it has enabled software developers to dream big.

Zenonia, a game for the iPhone made by Korean cell phone game developer Gamevil, has been selected “Best Game of 2009” by the Apple iTunes Store. It is the only Korean game included in the top 30 games rankings and held the same position in sales.

○ Opportunity presented by iPhone

Gamevil is a small company that earned 15 billion won (12.8 million U.S. dollars) in revenue last year. Yet its success has special meaning.

In Apple’s iTunes Store, around a million dollars worth of software for iPhone are sold every day along with music and movies.

Zenonia topped the sector for role-playing games from May through October. As a result, the volume of the game’s exports soared from 500 million won (429,300 dollars) on average between 2006 and last year to 1.47 billion won (1.26 million dollars) in the first nine months of the year.

Another Korean game maker Com2us ranked No.1 at the iTunes Store with “The Chronicles of Inotia.”

This was possible because of the new business model created by iPhone and the App Store. Apple shares its profits excluding basic costs such as fees for managing Web sites once software is sold with developers.

Since Apple gets 30 percent and developers 70 percent, it is not uncommon to see certain developers rake in hundreds of thousands of dollars overnight. In the U.S. software developers can start a business aiming at this market.

○ Software boom

Such success stories have led to the development of software for iPhones by Korean software makers. Korean companies have developed hundreds of software programs for iPhones.

KT sold about 100,000 iPhones through Wednesday since it began selling them Nov. 28. Given KT’s higher than expected sales, the size of the market is expected to grow dramatically.

Samsung sold only 17,000 units daily of its Yuna’s Haptic, the bestselling phone of the year, so sales of iPhones are not so bad.

Amid growing popularity of iPhones, Korean IT companies such as Samsung Electronics, SK Telecom and KT are creating similar software markets. They offer more opportunities to software developers, and consumers also can use other software for an affordable price.

“Korea’s software developers have had difficulties because of the small market rather than lack of competitiveness,” said Shim Chung-bo, the director of overseas production division of Gamevil. “In iTunes and the newly popping up software markets, we will showcase excellent games to the world.”