Motorola Mobility Scales Down in Korea

By Evan Ramstad

Motorola Mobility LLC began telling staff on Monday that it will close most operations in South Korea, a notoriously difficult market for non-Korean cellphone makers.

Motorola Mobility, now a unit of Google Inc. , will shut down research and development and cellphone sales in the country, but will continue to sell telecom equipment and offer customer support.

Motorola had just a 0.2% share of the cellphone market in South Korea through the first nine months of the year, according to Gartner, the technology research firm. It sold around 41,000 phones in a market that consumed nearly 16 million in that time.

“The changes in Korea reflect our plans to consolidate our global R&D efforts to foster collaboration, and to focus more attention on markets where we are best positioned to compete effectively,” Motorola said in its statement.

Samsung Electronics Co. , the world’s largest seller of cellphones by units and revenue, sold 10.2 million phones in its home market – a 64% market share – from January through September. Samsung’s global cellphone market share, according to various researchers, is around 25%.

South Koreans have a natural affinity to support local companies, but the government through the years has helped through rules and non-tariff barriers on products from elsewhere.

A rule created in 2005 that required the use of South Korea-developed middleware in phones that connected to the Internet kept smartphones by Research in Motion Inc. and Apple Inc. out of the market until its repeal in 2009. Recently, the South Korean government proposed requiring smartphone operating system developers turn over portions of their source code, something that would impact Apple and Google and RIM, to qualify for government-developed apps.

Samsung is followed in the South Korean market by the country’s other two manufacturers LG Electronics Inc. and Pantech Co.

Apple is a distant fourth, and other manufacturers are well below it Nokia Corp. operates one of its largest factories in South Korea but has sold less than 10,000 phones in the country this year.

Data show that South Korea is far ahead of other countries in its consumption of smartphones, which accounted for 93% of all sales during the first nine months of the year. Globally, smartphones accounted for around 40% to 45% of all cellphone purchases for the first nine months of the year.

Nigel Hawthorne Jacinta Stapleton