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(Nikkei BP Group)

(No.1 High Tech News Site in Japanese)

  • Korea's Personal Computer Industry Braces for Long Slump
  • July 27, 1998 (SEOUL) -- Korea's personal computer makers are passing through a severe recession, and the upcoming release of the Korean version of Microsoft Corp.'s Windows 98 operating system is unlikely to spark demand for new PCs.
    Industry data shows that domestic PC sales in the first half fell 39 percent to some 580,000 units, compared to 950,000 units sold in the same period a year ago.

    If the trend continues, it is unlikely that this year's sales target of 1.5 million PCs will be met. PC makers have little hope of a boost in sales, despite the release of the latest version of Microsoft's Windows OS.

    Microsoft said it will launch sales of the Korean Windows 98 on Aug. 11 with the same prices as in the U.S. applying to its standard and upgrade versions.

    Korean PC manufacturers said they think that the market response to Windows 98 won't be as strong as the boom when the Windows 95 operating system was introduced, because the new product offers no big improvements.

    Samsung Electronics Co., the largest PC maker in Korea, said it sold an estimated 220,000 units in the January-June period, down 33 percent from a year earlier. TriGem Computer Ltd. sold 134,000 units, down 7 percent, followed by Daewoo Telecom Ltd. with sales of 59,700 units, down 9 percent.

    LG IBM PC Co. saw its first-half sales fall some 20 percent to 58,000 units. Other smaller manufacturers reported sales drops of up to 40 percent.

    The prospect of a deepening slump has sent Korean PC makers scrambling to introduce new marketing tactics. TriGem, for example, attributes its relatively strong performance in the first half to its "Change Up" program, under which it guarantees the free replacement of its computers' motherboards and central processing units two years after the initial purchase.

    Other promotional efforts include offering free options and enhancing low-end and low-price models to cope with the change in buying patterns under the new economic realities.

    Previously, the main sales focus was on high-end and high-price products as well as relatively short life-span models with various operating features. However, manufacturers are now employing a two-tier approach. While offering expensive machines for the high end of the market, the industry is now producing a range of regular-quality, cheaper products for many consumers with less buying power.

    The notebook segment, which accounts for about 10 percent of the Korean PC market, is relatively immune to Korea's recession and its crippling impact on the industry. Notebook makers have seen only slight falls in sales or even increases from a year ago. Samsung Electronics, for example, hopes to attain a 50 percent domestic market share in the notebook segment by selling 95,000 units this year, which would be down slightly from last year.

    In the desktop arena, some manufacturers also began introducing flat-panel displays offering clearer and undistorted images. Samsung and LG are both leaders in this area.

    Korea's PC Market at a Glance According to the Korea Electronic Industry Association, the number of PCs in use in the country reached 6.93 million at the end of 1997, up 2.9 percent from a year earlier. There were 16 PCs for every 100 households in 1997, up slightly from 1996.

    (James Lim, Asia BizTech Correspondent)

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    Nikkei BP BizTech, Inc.
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    Updated: Sun Jul 26 17:49:30 1998