Lee Chul-hwan HTC Korea head

By Kim Yoo-chul

In just two years, over 20 million South Koreans, or about 40 percent of the total population, have purchased smartphones, one of the fastest adoption rates in the world.

But there have been complaints by customers over after-sales policies and a delay of software upgrades from foreign firms compared to their domestic rivals in a nation which boasts over 94 percent Internet literacy.

The Korea Consumer Agency (KCA) said it mediated 910 consumer complaints over handset-related issues, filed with it during the January-September period.

This was up from 558 cases the government organization saw a year earlier.

Jeong Chul-jong Motorola Korea head

Smartphone-related issues took up 82.6 percent or 752 of the total 910, the KCA said in a recent analysis.

The KCA was established in July 1987, based on the Consumer Protection Act. The body is aimed at protecting consumer rights and providing professional services on consumer affairs as a public institution.

``It’s true that we have been busier this year than the previous one. More domestic smartphone users are requesting us to mediate issues with device manufacturers. One interesting point is complaints mainly targeted foreign handset makers,’’ said a KCA spokesman.

Low call quality, delays in software update, poor after-sales policies and hardware-oriented defects were the key complaints.

The world’s biggest smartphone manufacturer Samsung Electronics and its local rivals were seemingly safe from consumer problems in general, thanks to strengthened after-sales programs, frequent software updates and stronger distribution channels, according to the KCA.

Out of every one million Samsung and LG smartphone users, filed complaints, the analysis showed, with home-turf advantage working as a major advantage for local firms’.

HTC, Motorola losing luster

The analysis claimed that Taiwan’s biggest smartphone maker HTC was the main target of consumer complaints in Korea. Out of every one million HTC smartphone customers, here, 216.7 filed complaints.

KCA officials and some market analysts believe a delay of software updates for HTC’s flagship devices is threatening its bottom line here.

Last year, HTC ambitiously released its first Google-ordered smartphone the Nexus One and sister device the Desire here.

But the Desire is still supported by the outdated Android 2.2 Froyo software, while its updated Gingerbread software, unveiled in August was still in its demo stage.

``Despite aggressive marketing strategies that had previously been pledged by HTC’s top-level executives, sales of its flagship products are slow mainly due to its passive stance on hardware upgrades. If such a trend persists, it could be damaging to HTC’s prospects in the smartphone market,’’ said a fund manager from a United States-based investment bank in Seoul by telephone, requesting anonymity.

The Taiwanese firm joined forces with Korea’s No. 2 mobile carrier KT. However, KT’s support packages that include distribution channels, promotions and marketing aren’t clear enough to help HTC ease such consumer woes, according to KT officials.

HTC representatives in Korea weren’t available for comments.

It is also entangled in legal fights with Apple over patents just like Samsung Electronics. Apple filed a lawsuit against HTC in March 2010 over its alleged violation of 10 its patents.

Google has provided financial support to HTC in its fight with Apple, though Google representatives here declined to confirm this.

Previously, Samsung chief executive Choi Gee-sung unveiled his company has set aside $200 million just for court battles with Apple.

Motorola has also been negatively targeted by South Korean customers.

The American company had 160.4 complaints filed for every one million smartphones sold here, according to the KCA.

``It seems evident that Motorola doesn’t care to implement strengthened after-sales policies, to provide on-time software updates and add compelling features for Korean customers. Motorola’s fortunes in Korea have been in decline in recent years and the trend is expected to continue,’’ said an SK Telecom official, asking not to be named.

SK Telecom is an important partner for Motorola here. Kim Sang-min, a 40-year-old handset shop owner in Seoul’s busy Myeongdong shopping district, said he’s phasing out Motorola products from his shelves as well as HTC phones.

Motorola officials in Korea weren’t available for comment.

The KCA failed to release its analysis for Apple iPhones because SK Telecom and KT, the authorized iPhone sellers in Korea, and even Apple Korea refused to submit iPhone sales numbers.

SK Telecom and KT have been cutting the price of the iPhone 4S to meet their earlier targets agreed with Apple for the device.

Apple is still passive in fixing defective iPhones or replacing them despite a backlash from Korean customers, according to officials from local carriers.