“iPhone Effect” starts pushing smartphone prices down in Korea

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This weekend the long awaited iPhone has arrived to South Korea, generating much excitement there.

Most of the reports focused on better then expected iPhone pre-orders, and eager fans lining up for a long hours of wait to get their hands on the new handset.

But, looking at the actual figures – 65K pre-orders – they are quite good, but not really that impressive for a country of almost 50 million people.

The much more important part of iPhone’s arrival to Korea story, is that it is the first high profile non-Korean mobile handset to be sold there. And the effects of this launch are already reverberating through the mobile market there.

Up until this now, Korean mobile market was a virtual duopoly, ruled mainly by Samsung and LG, with Pantech coming in a distant third. Part of that was thanks’ to WIPI –a proprietary mobile internet platform, mandatory to the net capable handsets in Korea. But almost a year after WIPI requirement was lifted, not a single foreign handset was able to get consumer notice in Korea. Or to make any impact and affect high priced/little subsidized handset approach, that is a tradition in local mobile industry in Korea.

The iPhone is already changing that. Only a day after the iPhone launch, Samsung has lowered the prices of it’s latest Smartphone – T Omnia 2, which, added to the increased subsidy from SK Telecom, now is retailing at the similar price as iPhone.

According to Telecoms Korea:

The large discount of a mobile phone’s price only a month after release has no previous example in the local market, especially for the No. 1 mobile-phone maker and the No. 1 mobile carrier. This drastic price cut was most likely due to the “iPhone Effect.”

Of course, much will depend on how successful iPhone eventually is in Korea. But once started this kind of price war is not easily stopped, especially if other handset makers, like Nokia, Motorola or HTC are able to get their foot through the door as well.

Via UV