By Kim Tong-hyung
Staff Reporter
The South Korean Internet market is ruled by the big, green giant called Naver (www.naver.com), but its undersized rivals are retooling relentlessly to shake the status quo.
The biggest noise is coming from Nate (www.nate.com), the No. 3 Web portal behind Naver and Daum (www.daum.net), which is promising new product innovations and strengthened search capabilities as it prepares to reveal its revamped site in March.
The newer version of Nate will absorb the services of Empas (www.empas.com), which will be closed from next month, and better leverage the popularity of the Nate-On instant messaging services and the Cyworld (www.cyworld.com) social networking services, according to SK Communications, which operates the Web sites.
An earlier offensive against Naver has been provided by Daum, the perennial industry runner-up, which introduced a lavish digital map service, based on a detailed photographic map of the entire country, last month.
Daum has more tricks in the bag, as it plans to revamp its news section in its startup page, allowing users to customize the section through subscriptions and content feeds, responding to Naver recently revamping its main page to resemble Google's iGoogle startup page.
``Nate-On is the country's most used instant messenger service and Cyworld has been utterly dominating the social networking business for years,'' said a SK Communications official.
``The idea is to combine those strengths under a single Web site in Nate and also enable more sophisticated search services and provide Internet users the total solution.''
Empas had garnered a reputation as an innovator in search services, including its ``natural language search,'' introduced in 1999, that allowed users to use sentences, instead of just keywords, in searches.
SK Communications, which acquired Empas in 2006, hopes that the Web site's consolidation into Nate would help drive up traffic to the flagship portal.
The company's biggest assets are clearly its 22 million subscribers for Cyworld and 25 million subscribers for Nate-On, and the wealth of user-generated content from both platforms could be the key in boosting Nate's search revenue.
The renewed Nate will provide Cyworld postings in its serach results, and, through the Nate-On pop-up windows, will enable what it calls as a ``real-time knowledge search,'' which allows users to edit search results through a real-time question-and-answer format.
SK Communications is also looking to increase its profits from its wireless services, taking advantage of the vast customer pool of its parent company, SK Telecom, which controls more than half of the country's mobile telephony customers.
It remains to be seen whether the innovations would be enough to spark competition in the search sector, where Naver and Daum reign like oversized kids in a nursery room.
And while its tempting to call Naver and Daum's supremacy as a duopoly, the relationship between the top two portals have been as lopsided as Simon and Garfunkel.
Based on the popularity of Knowledge Search, the country's original Q-A search service, Naver controls more than 75 percent of all search queries, while Daum manages to garner 15 percent of the traffic.
Nate, despite its ``big three'' status, is just one of the ragtag band of Internet companies competing for the remaining 10 percent.
Internet companies have been accelerating their efforts to garner more traffic, especially as they rely increasingly on search revenue in tough economic times.
Despite the gloom prevailing in the industry sector, NHN, the operator of Naver, rode high fourth-quarter sales to become the Korea's first Internet company to pass the 1 trillion won (about $730 million) mark in revenue last year.
Although the company reported declining sales in banner advertisements and other forms of online display ads, it still posted steady growth in search revenue.
Industry watchers suggest that search may be the most recession-proof advertisement medium, considering its efficiency and cost-controlled business model.
The economic downturn will have more companies relying on search as they look for better ways to target their marketing and advertisement expenditures for tangible sales results, industry watchers say.