Naver Falters As Organization Grows Fat, Dull
By Cho Jin-seo
Staff Reporter
Its revenue keeps growing every quarter and its profit remains healthy as ever, but NHN, the largest Internet company in Korea, is facing an identity crisis as a byproduct of its rapid growth _ should it transform itself into a conglomerate system like Samsung?
Dubbed ``Korea's Google,'' Naver enjoys a dominant position in the portal sector, processing more than 80 percent of all search queries from Koreans every day. But it has been showing signs of weakness in the past few months. Critics say that the 12.5-trillion-won firm's corporate culture is becoming more like that of a Korean conglomerate, and not like that of Google or Microsoft.
NHN has tried to imitate Google in many aspects, such as providing freshly roasted coffee, cutting-edge office equipment and free shuttle bus services between Seoul and Bundang, where the company is located. But many in the Internet industry believe that NHN has grown too big and too bureaucratic, thereby losing the enthusiasm, creativity and courage it had had in its early days.
Changes in several indexes show that Naver is not as untouchable as before. According to Korean Click, an Internet market research firm, Naver was ranked second after Daum in August in the number of news pages viewed by users, at 3.17 billion and 3.57 billion, respectively. The gap expanded to 2.63 billion pages and 3.27 billion pages in October, meaning that more people are leaving Naver to read online news elsewhere.
Another popular service ``Knowledge In'' also started to lose its popularity. Korean Click says that the page-view index for Naver's open dictionary service has decreased from 1.4 billion in July to 1.23 billion in September. Meanwhile, its potential rival Wikipedia Korea saw its page view index triple over the same period. Besides, there is no apparent candidate to be the next ``killer service," yet.
The stock price also indicates that the firm has fallen into the doldrums. Having been on a continous incline for years until peaking at 300,000 won this October, the price fell to 235,000 won in November and since then has been hovering around 250,000 won _ un unusual situation for the firm.
``NHN is known as the Samsung of the Internet industry,'' said Yeo, a software engineer who requested anonymity. Samsung Group is famous for its tight control over employees such as its no-union policy and long working hours. ``And there is a growing emotional gap between newcomers and old employees, which makes the firm's atmosphere even more stressful.''
In fact, NHN's resemblance of Samsung is only natural. Its top management, as well as low-level engineers, is filled with former Samsung employees. Samsung SDS founded naver in 1997 as an in-house venture project. It then branched out in 1997 under Lee Hae-jin, now the chief strategic officer and largest shareholder.
Lee is surrounded by a corps of Samsung SDS alumni including Kim Beom-soo, who founded Hangame, which was later merged into NHN; Moon Tae-shik, the former chief of NHN USA; Kim Hee-sook, the fourth largest shareholder and a former board member; Namgung Hun, the current chief of NHN USA; and Kim Jung-ho, the chief organization manager who worked at the human resource department of Samsung SDS.
This week, rumors rapidly spread among stockbrokers that NHN will adopt a holding company system to raise management efficiency. The company neither admitted nor denied this.
``We have no specific plan of turning into a holding company,'' the firm's chief finance officer Huh Hong said in a report to the stock market on Thursday, after E-Daily news agency quoted him as saying a sort of ``yes, but not now.''
Others point out that NHN is paying the price of its arrogance. The Naver site blocks outside search engines in order to prevent them from accessing its information source. So many blog users who want to be searched by others have been leaving Naver to other services such as Daum, Yahoo and Egloos.
The exclusiveness has been irking even CEOs of other companies. Kim Taek-jin, CEO of NCsoft, the largest game company, said in a public speech last month that such short-sightedness is dooming the Korean Internet industry's future though he avoided mentioning Naver's or NHN's name. Ahn Chul-soo, a respected Internet pioneer and founder of Ahnlab, a leading Web security company, was more direct in attacking NHN saying that it is desiccating the industry by sweeping up talented computer programmers.
NHN's management seem to be aware of such criticism. Last month, the firm handed out a book named ``Listening Attentively to Others'' to each of its 2,100 employees. Coincidentally or not, the book had an anecdote of Samsung Group Chairman Lee Kun-hee on its cover wrapper.
indizio@koreatimes.co.kr