Once the world’s biggest MP3 maker, iriver has struggled to cope with the Apple-dominated world of smartphones and touch-screen tablets. The company is now looking to find new niche markets and its recent line of products includes electronic book readers. / Korea Times

Korean MP3 makers struggle to retool for smartphone era

By Yoon Ja-young

Smartphones have made life convenient but were fatal for some. The handy devices serve not only as a phone but also a MP3 player, digital camera, portable multimedia player (PMP) and electronic dictionary. It consequently has cornered many industries that are now desperately seeking survival strategies.

Business diversification

Navigation is one of the industries hit hard by smart devices. Thinkware and Fine Digital, the country’s two top navigation manufacturers with 90 percent of the market, are suffering as smartphone apps eat into their market. Thinkware had its operating profit fall by 76.4 percent to 1.5 billion won in the third quarter last year compared from a year ago. Fine Digital recorded a deficit.

MP3 player manufacturers have also suffered., once the world’s top MP3 player maker, iriver, applauded by Bill Gates for its products, has made a loss since the first quarter of 2009 as people switched to smartphones to listen to music. Cowon System, one of the top PMP manufacturers, was in the black since its launch in 1995 with around a 70 percent market share, saw an operating loss in the second quarter of last year for the first time in its history.

The small but competitive players, which fell victim to the i-something innovations by Apple, have chosen business diversification as their survival strategies.

Navigation companies, for instance, started producing “black boxes” for cars, and Thinkware advanced into the security service business with KT Telecop.

Cowon has also launched a black box for cars. “The market was dominated by a number of small players, and there was no competitive brand name with consumer trust in this market. Thankfully, the (teenager) consumers who used our MP3 players grew up, and they are very positive about our black box as they have trust in our brand,” said a Cowon spokesman. The firm is busy with manufacturing to meet demand as its black box stocks are selling out he added.

Using strengths

The main consumers of PMP have been students taking online lectures and using electronic dictionaries. Cowon had strengths in the education content business from the beginning. “We used to sell content even before the launch of smartphones. As the market diminished following the introduction of smart devices, we had to search for new business items. We prepared for over a year to start our smartphone application business,” the Cowon spokesman said.

The company is especially competitive in educational content, having provided it for in MP3 players and PMPs. Its Korean language learning app, featuring popular girl group KARA, has been receiving a favorable reaction in Japan. It also launched a mobile messenger service for teenagers to much acclaim and has been offering a social commerce information service since August. “We didn’t have huge expectation for the business but it is better than what we expected. We were known as a manufacturer but we plan to increase the content business in our portfolio,” the spokesman said.

iriver is also seeking an opportunity in the robot market. It launched Kibot 2, its latest robot for children last month. It has already sold over 10,000 of the original Kibot since its launch last April.

It has also launched smartphones and tablets, targeting teenagers with a competitive edge in price.