Cheap foreign devices hit the market

The Korean smartphone market was once dubbed the cemetery of foreign phones for its loyalty to domestic players like Samsung Electronics and LG Electronics.

But a slew of foreign smartphone makers are trying to reverse the trend with inexpensive products.

Sony Korea recently released a 3G phone, the Xperia E1, for 165,000 won ($162), the cheapest foreign smartphone ever launched in Korea.

The price is almost equivalent to that of a feature phone, but the Xperia E1 has some unique appeal, such as its Walkman button and xLOUD speaker. It also weighs only 120 grams (4.2 ounces) and reflects Sony’s focus on design.

Prior to the release of the Xperia E1, Acer, a Taiwanese handset maker, launched the Z150 Liquid Z5, a 3G phone, for 259,600 won. Asus of Taiwan also began selling Fonepad 7, a five-inch phablet with LTE network capability, for 349,000 won.

These phones are distributed by Korea’s main mobile carriers and are available at no upfront cost with a multiyear contract.

“There is a prejudice that they are cheap phones, but those who have used the phones are mostly saying they are not much different from other Android phones,” said Jang Ji-na, a manager at Sony Korea. “They don’t have cutting-edge features, but they are not a problem to consumers who mostly use basic functions like the Internet and multimedia.”

Analysts attribute the emergence of inexpensive foreign models to growing demand for low-priced phones in Korea. In addition, Sony’s recent success with a phone that was slightly less expensive than Korean flagship devices was a boost to the confidence of foreign manufacturers, they say.

The Xperia Z2 came out in May and Sony Korea sold out the 1,000 Xperia Z2s it stocked for pre-order sales within an hour. It was the first product in 30 months released by the Japanese company in Korea, and market analysts say it was an indicator of the desire for less expensive smartphone products in Korea.

But analysts believe it is too early to say whether cheap phones from foreign makers will succeed in the local market with many Korean customers not attracted to phones unless they come with up-to-date specs in such areas as memory, battery capacity and data transmission speed. And foreign companies have a less extensive network for after-sales service compared with domestic phone makers.

Another hurdle is that the three major domestic mobile carriers - SK Telecom, KT and LG U+ - are not very active in selling foreign phones. “Considering our relationship with Samsung Electronics and LG Electronics, it is not easy for us to actively promote foreign phones,” said an official of one of the carriers, who declined to be identified. Local carriers also lower the prices of premium phones from Samsung and LG using illegal subsidies.

With the exception of the iPhone from Apple, foreign phone makers have yet to log substantial success in Korea. Products by Motorola, Nokia, BlackBerry and HTC disappeared into oblivion not long after their launch here.

But foreign handset manufacturers detect an air of change brought on by the growing popularity of altteul, or thrifty, phones. There also is a growing “second phone clan” in Korea, referring to people who have two smartphones.

And demand for inexpensive smartphones among middle school and high school students is also on the rise.

“Expanding choices for customers is a positive effect that low-end foreign phones are bringing in,” said Lee Suk-kyu, a professor of marketing at the School of Business at Sungkyunkwan University.

BY SOHN HAE-YONG [joe@joongang.co.kr]