Why Google Failed and the iPhone Won in Korea

October 21, 2011

10:12 am

After over a decade, many sources put Google’s desktop market share in Korea at 2%; Yahoo! captures about 6%. Nokia left Korea in 2003, unable to compete with Samsung and LG, and Walmart began withdrawing in 2006, failing to adapt to local supermarket culture.

“Korea’s been the giant killer for many years,” says Richard Min, cofounder of incubator Seoul Space. “Pretty much everyone who’s been famous for being #1 worldwide came into Korea and failed, or didn’t do anything near what they thought they would.”

Part of this may stem from Korea’s isolationist streak, likely encouraged by wars and occupations in the 20th century. “Korea’s called the hermit nation. We built this walled garden, this silo, and within it they’re very comfortable,” explains the New York-born Min, switching between “we” and “they.”

In this reclusive nation, desktop search is dominated by local companies Naver and Daum, which together control more than 90% of the market. Even TicketMonster’s impressive acquisition by LivingSocial spurred some backlash for their selling to an international company, says Min, who talked with the TicketMonster team when the idea was still a PowerPoint.

Another reason for the “giant killing” may be, simply, that Koreans aren’t impressed – some features that are new to Americans have long been accepted by Koreans. For example, Naver launched knowledge search in 2002, 3 years before the similar Yahoo! Answers came out. And virtual goods are routine in Korea, arguably the gaming capital of the world.

“People are like, ‘Wow, you can pay for virtual goods with your cell phone?’ We’re like, ‘You can’t?!’” jokes Min.

But the wall around Korea began to crumble in 2009 with the release of the iPhone – what Min calls “the first truly disruptive technology to come in and shake things up.” As of January, 2 million iPhones had sold there, in a country of less than 50 million people.

The phone’s sleek design may appeal to Koreans’ high fashion sense, and they may be bringing iPhones home after time spent abroad, but the key must be the apps. Not only can Koreans build apps themselves, but apps open the door to new social interactions. The iPhone becomes just a tool, not an intrusive international technology trying to change the way things are done.

And ironically, through those same apps, the iPhone is helping other foreign brands sneak into Korea. “It became the Trojan horse for other international companies like Twitter, Facebook,” Min says. Koreans are following international stars on Twitter, powerhouse Samsung began releasing Android phones, and Google’s mobile market share has reached 15 or 20%.

Short of being a game-changing tech genius, international companies can settle for finding a competent local partner to help them navigate Korean tastes – mysterious, picky, but well worth earning.

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Kira M. Newman is a Tech Cocktail writer interested in the harsh reality of entrepreneurship, work-life balance, and psychology. She is the founder of The Year of Happy and has been traveling around the world interviewing entrepreneurs in Asia, Europe, and North America since 2011. Follow her @kiramnewman or contact kira@tech.co.

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