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HTC leaves South Korea to Samsung, LG et al

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Mobile device biz HTC has abandoned its operations from Samsung’s home market of South Korea, in yet another blow to the beleaguered Taiwanese handset giant.

The firm announced in a widely reported statement that the move was being made to “streamline operations”.

"This is a hard decision that has direct impact on people who have contributed to the growth HTC has experienced the past several years," it added.

It seems that several years of failing to make an impact in a market dominated by local hero Samsung and several other home-grown players has finally taken its toll.

HTC never really pushed beyond a five per cent market share, hitting that high in Q4 2010, according to Gartner. Since then it has languished with one or two per cent over the past couple of years.

“Globally, many players are struggling to maintain market share as Samsung and Apple share the majority of profit in the smart phone market,” Ovum analyst Mark Ranson told The Reg.

“The Korean market is especially difficult because of the dominance of not just Samsung but other local players, LG, and Pantech – Korean players are even more dominant in the local LTE smart phone market.”

Gartner’s Seoul-based analyst CG Lee explained that this local dominance in the LTE space is “because there’s no standard frequency band between countries”, making it hard for foreign handsets to make an impact.

“Without economies of scale, foreign vendors also find it difficult to survive in a communications market where huge marketing dollars are needed,” he told El Reg.

Although HTC announced its intention to pull out of Brazil last month and has been hit with a run of poor financial results recently, the Korean departure is not necessarily a bad move for the company, according to Ovum’s Ranson.

“Ovum expects HTC will treat every market on a case-by-case basis, assessing which offer the best growth potential – few other nations will offer such difficult and unique market conditions as South Korea,” he said. ®

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