AhnLab Looks to Perform in International Stage
No. 1 Anti-Virus Firm Speeds Up Global Expansion
By Kim Tae-gyu
AhnLab, Korea's primary integrated information security company, looks to duplicate its dominance in the international market on the back of its competitive edge in technology.
CEO Philip H. Kim, who took charge of the Seoul-based anti-virus software developer last October, made the point during a recent interview with The Korea Times.
``To continue to chalk up fast growth, we need to turn our eyes to overseas markets based on our proven technology and experience,'' Kim said.
``As a leader in the computer/online security business, AhnLab is also required to position itself as a global player to set a role model for other software companies here,'' the 48-year-old said.
In fact, AhnLab has gone all-out to make inroads into the offshore markets since the early 2000s after establishing an unrivaled position on the domestic scene.
The outfit exported its first products in late 2000 to Japan. To accelerate overseas expansion, it set up a subsidiary in Tokyo in 2002 and in Beijing a year later.
Under the stewardship of Kim, such efforts bore fruit as AhnLab racked up 11 billion won in sales last year from its global business, up 37 percent from the previous year.
It was the first time for the 14-year-old company to earn upside of 10 billion won from abroad. Overall, the firm posted 66 billion won in sales and 9.7 billion won in operating profit in 2008.
The computer engineer-turned-CEO said AhnLab will advance one step further by establishing another milestone this year ― 15 billion won sales overseas.
``The 10 billion won turnover for a software company is equivalent to 100 billion won for hardware manufacturers. We are well aware that the 15 billion won is a tall task,'' Kim said.
``However, we are determined to reach the target with our top-tier products in such fields as Internet and mobile banking,'' he said.
Software Does Matter
Earlier last month, President Lee Myung-bak reportedly wondered why the nation doesn't have a company similar to Japan's Nintendo, which is popular for its gaming devices.
Since its debut in 2004, Nintendo's DS video-game consoles have sold about 100 million units across the world mainly in the United States and Japan.
The dual-screen handheld machines have also been big hit here, thus making President Lee ask top policymakers ``why such a company does not sprout up in Korea?''
Kim had the answer ― because the country turns a blind eye to the importance of software.
``In terms of hardware, Nintendo products may be inferior to those of its rivals. But the firm has an unparalleled edge in software. That makes the difference,'' Kim said.
``In order to have a Korean version of Nintendo, we need to have a software-first philosophy. Otherwise, we cannot remain ahead of the pack,'' he said.
Kim pointed out the nation is overly tilted to hardware such as cars, home appliances, computers, mobile phones and memory chips, which have propped up its economic growth.
``Korea has come this far thanks to exports of hardware products over the past few decades. As a result, the country is obsessed with the hardware-oriented mindset,'' Kim said.
``That doesn't work any more. Worse, the hardware-centric mantra seems to stand in the way of software development. People need to understand software creates bigger value than hardware,'' he said.
Kim added software composes of almost 40 percent of computer prices ― hence, gaining competitiveness would be the best way to cut hardware costs.
Raising Warning Flag
Kim pointed out that the country's computer or online security has improved substantially but there remains a long way to go.
``As far as computer or network safety is concerned, some companies especially financial institutes have advanced much as of late while some are still lagging behind,'' Kim said.
``Generally speaking, however, local companies basically do not pay much attention to security issues. They simply do not want to invest the money,'' he said.
Asked about whether the country runs the risk of experiencing once again the disastrous Internet disruption, which took place early 2003, Kim's response was ``possibly.''
``We cannot exclude the likelihood. Similar attacks on the network have always happened. Subsequently, we need to be prepared for that,'' Kim said.
On January 25 2003, damaging glitches caused by a ``slammer worm,'' notorious for crippling networks, slowed down or halted Internet traffic worldwide.
The Internet stoppage could have ended up causing a catastrophe in Korea where many use online financial transactions and settlements.
Fortunately, the country avoided the worst-case scenario since the date was Saturday, when people hardly used Internet banking services or online trading.
Yet, the Internet paralysis showed how Internet security is important to people's daily life and made the country come up with a variety of measures to prevent a recurrence.
For Kim, however, such measures are not enough as there are too many holes to plug. On top of that, he worries people have yet to have a sense of urgency about it.
Smart Anti-Virus Software
A computer virus generates strain on the laptops or desktops. Online security solution companies like AhnLab make anti-virus solution to grapple with it.
Then, that's it? No way. The virus writer counters the anti-virus with a more virulent one to cause troubles to the immune system of PC and this forces AhnLab to upgrade the anti-virus software.
This cat-and-mouse game has continued since computer viruses came to town decades ago and the world has seen evolution from both sides.
``The virus becomes more and more sophisticated. As a result, the cure needs to be smart too. When new malicious codes plague networks or machines, the smart anti-virus program has to deal with them on its own,'' Kim said.
``Towards that end, we are working on creating an anti-virus that can analyze the pattern of viruses for itself and fight against them. It is a tough task, though,'' he said.
History of Market Bellwether
AhnLab was founded in 1995 by first president Charles Ahn, the doctor-turned CEO who currently teaches at the Korea Advanced Institute of Science and Technology as a full-time professor.
AhnLab gained prominence from the very beginning by its unique business model of allowing the general public to use its famous anti-virus program, V3, for free while charging corporate customers.
Such a strategy worked in a handsome way and the company gained the hearts and minds of clients. Once the market trusted the company, it fared well.
AhnLab even tided over the Internet bubble burst in the early 2000s, which caused so many high-tech companies to fold both at home and abroad.
It's annual turnover has been on the rise from 31.5 billion won in 2004 to 43.5 billion won in 2006 and 56.2 billion won in 2007 before reaching 66 billion won last year.
Its revenue from overseas businesses has also jumped from 5.2 billion won in 2006 to 7.6 billion won in 2007 and 11 billion won last year.