Why Korea Won't Bite the Apple

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It is also equipped with a five-megapixel camera, Movie Maker software enabling the user to mix music with videos, and a Google package allowing access to the Internet, Gmail, Google Maps, and YouTube videos.

Korea's regulatory requirements could also discourage the iPhone's debut in the market. To help smaller companies develop Internet-related applications at lower costs, the Seoul government in 2005 made it mandatory for all mobile-phonemakers and content providers to use a software standard for Internet access, called WIPI, or Wireless Internet Platform for Interoperability, in Korea. "I doubt Apple will be bothered to develop a new WIPI-enabled phone just for the Korean market," says spokesman O Young Ho of KT Freetel, Korea's second-largest mobile carrier, known as KTF, that is in talks with Apple to sell the new iPhone.

A Little Crack in the Armor?

Little wonder the three Korean operators aren't in a hurry to forge a partnership with Apple. Both SK Telecom, the country's largest wireless carrier, with a 50.5% market share, and LG Telecom (with 18%) have made it clear they have no plans to offer the iPhone. O says Apple is one of many phone manufacturers that KTF (with 31.5% share) is in contact with for its future handset lineup but admits there are big gaps in their negotiation terms.

Some industry-watchers bet KTF will eventually strike a deal with Apple, probably within a year. "KTF has been desperately trying to offer differentiated services to narrow its gap with SK, and the iPhone could be one option," says Stan Jung, telecom analyst at brokerage Woori Investment & Securities. Meanwhile, the Korean government says it will review its policy requiring WIPI for all Internet-capable phones now that business environments have changed in the past three years.

Moon is BusinessWeek's Seoul bureau chief.