Saturday, June 21, 2008

New iPhone will take away major South Korean market share from LG and Samsung

No matter how they label their new products, ‘iPhone hunters,’ ‘iPhone killers,’ Samsung Electronics Corporation (SEO: 005935)and LG, two of the largest mobile phone producing companies of South Korea will face tough competition from the new Apple iPhone 3G.

According to the data of Strategy Analytics, till now, LG enjoyed a sales growth four times higher than the industry average in South Korea and Samsung two times. Now, after the release of new iPhone model at a low subsidized price could take away major market share of LG and Samsung in South Korea.

Yankee Group analyst, John Jackson, said that you would not need an analyst to tell you that a low subsidized price for the most-anticipated gadget ever was going to move huge amounts of iPhones in finite number of channels through which they would sell. It would hurt the Korean producers in key high-end segments.

Not only Samsung and LG but other major mobile phone companies like Motorola (NYSE:MOT) and Sony Ericsson are also expected to face a tough competition against the new iPhone. The latest model Apple iPhone 3G offers phone, iPod media player, web browser and faster internet access on advanced wireless networks. The Apple iPhone 3G will cost $199. From Jully 11, it would hit the market. According to Jae Lee, Daiwa Securities analyst, now it would be the best time for Korean makers to trim the fat from their cell-phone prices or else, they would not stand a chance in front of the iPhone.

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