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IT industry too dependent on smart devices

By 김지현

Published : July 26, 2011 - 19:24

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Electronic dictionaries, MP3 players, navigation being used less frequently


The smart device boom may be a blessing for many who now have instant access to everything from emails to the nearest restaurant serving their favorite foods, but smart products also are making electronics companies increasingly lazy.

The local IT industry is apparently too heavily dependent on smart devices such as smartphones and tablet PCs, making it difficult for demand to pick up amid a lack of choices, industry experts point out.

“The demand for conventional IT products remains quite flat, and a large part of the reason is because there is a lack of killer products,” said Kang Jung-won, a senior researcher for Daishin Securities.

IT stocks have been largely underperforming for the past year, especially with the bellwethers not faring as well as they should have.
Visitors stand next to a billboard showing the Galaxy Tab 10.1 at Samsung Electronics Co. headquarters in Seoul. (Bloomberg) Visitors stand next to a billboard showing the Galaxy Tab 10.1 at Samsung Electronics Co. headquarters in Seoul. (Bloomberg)

Samsung Electronics and LG Electronics, both which are expected to announce their second quarter results this week, are unlikely to be posting high results, particularly when compared to the outstanding performance by Apple Inc.

Samsung, despite its reputation as an electronics maker, has recently been increasingly focusing on smartphones, particularly its Galaxy S2, sales of which will reportedly surpass those of Apple’s iPhones in second quarter sales.

LG, which is known for its leading status in white appliances, is lagging behind in smart devices, but it also is hoping to find its groove by releasing a series of smartphones.

The company has been breaking out in so-called smart appliances as well with smart refrigerators and washing machines which have functions such as browsing the internet or letting the consumers know when their groceries are going bad, but aside from those, they have yet to produce any “killer” appliances.

The lack of killer products are leading to a lack of overall demand for conventional goods, studies showed.

Consumers stray from non-smart

According to a report released by the Korea Internet and Security Agency last week, more than eight out of every 10 smartphone owners said they no longer use their e-book readers or make less use of it. A total of 4,000 people between ages 12-59 were surveyed for the report.

About 80.5 percent said they less frequently lay hands on their portable media players and 79.2 percent said games are rather played on their smartphones than the once-popular game machines, it said.

Digital audio player, also known as the MP3 player, were not an exception from the trend.

Up to 78.4 percent of the survey respondents said MP3 players, such as the Apple iPod, were often avoided nowadays since most smartphones come with the music playing function, said the report.

MP3 players, during the late 1990s and early 2000s, had enjoyed a significant boom, with most young people wanting the devices as birthday gifts or giving them as presents to friends and family members.

Electronic dictionaries and navigation systems were also among the list of electronic products that are being used less frequently, the agency’s survey showed.

Companies now have to find new ways of survival, and it’s already happening, according to some experts.

“It’s now more about divergence, if electronics companies want to survive and nab more consumers,” said Lee Dong-geun, a senior researcher at LG Economic Research Institute.

Divergence, in this case, means electronics goods that focus on one or just a few functions, unlike some of the smart devices out there in the market that is too complicated.

“To grab the attention of a wider scope of consumers, the electronics makers need to roll out products that can appeal to a wider audience,” Lee pointed out.

Smart TVs, which are just starting to pick up, are one example, Lee said, stressing that there is indeed a market for if not “killer” goods, then for new devices and products that make life easier without necessarily requiring all the new-fangled functions that are not always amusing or necessary.

By Kim Ji-hyun (jemmie@heraldcorp.com)