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By Jonathan Hopfner
May 26, 2011 11:21 PM EDT
The proliferation of smartphones in South Korea is transforming this former "walled garden" ruled by local players into one of Asia's most promising destinations for global Internet and social networking firms.
A solid, wireless broadband infrastructure, feature-packed new models from homegrown giants Samsung Electronics and LG Electronics, and an explosion in mobile applications and services have all contributed to the breakneck speed of smartphone adoption.
In just 18 months the number of smartphone subscribers in South Korea has exploded more than ten-fold to top 10 million, or around a fifth of the population, according to the Korea Communications Commission (KCC).
South Korea ranks first in Asia and third globally in smartphone penetration, according to eMarketer, lagging only the United States and Western Europe.
All this is music to the ears of handset makers and application developers.
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"Korea is interesting because it's got a large, tech-savvy and concentrated population," said Andrew Mason, founder and CEO of group-buying site Groupon, which launched services in Korea in March. "It's the perfect market for Groupon."
Smartphones have become a "Trojan horse into the Korean market" for the likes of Google and Facebook, which had a head start on local firms in optimizing their offerings for smartphones, said Richard Min, partner at Seoul-based startup incubator, Seoul Space.
Foreign entrants have moved quickly to capitalize on the changing landscape. Twitter launched a Korean-language website in January after seeing a 3,400 percent spike in the volume of Korean tweets in 2010. It now has around 3 million local users, according to market research firm, Daumsoft.
Facebook opened a Seoul office late last year to seize on the "great momentum" in Korea, a company spokesperson said.
And Groupon Korea already ranks among the top four players in South Korea's increasingly crowded social commerce market, with a growth rate that is "accelerating every week," said local CEO, Hee Seung Hwang.
GOOGLE'S CHANGING FORTUNES
Arguably the biggest beneficiary of Korea's smartphone explosion has been Google, whose previous attempts to woo local Internet users were disappointing. As of March 2011 it held a mere 2 percent sliver of the standard Internet search market, according to Seoul-based research house, Metrix Corp.
But Metrix estimates Google now vies with Korea's Daum Communications for second place in the mobile Internet search market, with a share of more than 15 percent.
Google's Android operating system, on which Samsung and LG's latest smartphone offerings are based, powered only 3 percent of South Korea's mobile phones in March 2010. That figure jumped to 60 percent by January 2011, KCC data shows.
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