08 October 2012

Smartphone Wars, Gangnam Style!

PSYThere is an incredible video on YouTube which shows South Korean pop star PSY performing his global viral hit Gangnam Style in front of a Seoul audience of 80,000 fans.  The entire audience pulses with the waving of arms in time to the music, which is itself barely audible over the noise of the crowd which, to a man, woman and child, appears to know every single word of the song.

To find a comparable achievement by an artist in the western world, you might have to go back to Queen's performance at the Live Aid convert in 1985, which was remarkable for the fact that, while the crowd of 72,000 was slightly smaller than PSY's, Freddie Mercury had them eating out of his hand despite the fact that they were not a dedicated Queen audience.

But if the PSY phenomenon demonstrates anything more broadly, it is that Apple should be afraid… very afraid!

So what has K-Pop got to do with smartphones, we hear you cry? We think quite a lot, as we shall explain.

WHO IS PSY?

Unlike Los Del Rio, the Spanish duo responsible for inflicting the Macerena on the world (over and over again – five of their six albums feature versions of the song), PSY is no one-hit wonder.  In South Korea he had six number one singles between 2001 and 2006, before his music career was interrupted by mandatory military service.  His comeback release in 2010 reached sixth position on the album charts, with two singles peaking at number four.  His latest album features Gangnam Style, which has already hit number one in Korea, Australia, Canada, New Zealand, Norway and the UK, and number two in the US, Switzerland and Ireland.

While the novelty of the song is certainly a major factor in its success, we suggest it would be wrong to dismiss it on this basis.  While PSY may or may not be able to repeat this particular global success, it is certain that we are going to see more Asian artists charting outside their native countries.  And while 'novelty' (as in 'novelty act') can be used as a pejorative, it is worth bearing in mind that in other contexts it is also the fundamental test of patentability, as well as being a common quality of what we would call 'innovation'.  Novelty is what happens when someone does something that has never been done before.

THE GROWTH OF KOREA’S CULTURAL INFLUENCE

The genre of music now known as K-Pop had its beginnings in the early 1990's in imitation and fusion of American popular music styles, and Japanese pop.  However, as is so often the case, imitation soon turned to innovation, with new styles of music and performance being created out of the fusion of imported styles, along with original contributions from Korean artists.

On the growing cultural influence of K-Pop, the current Wikipedia entry has this to say:

South Korea is emerging in the 21st century as a major exporter of popular culture. K-pop has been embraced by the South Korean government as a tool for soft power abroad, particularly towards youth. K-pop has come from humble beginnings to gain a huge fan base not just in Asia but also other parts of the world, and is considered by some to be South Korea’s greatest export because of its popularity and growing influence. As South Korea continues to develop its IT infrastructure, K-pop music is being shared over the internet and through mobile devices more rapidly than ever.

But it is not just about K-Pop. In an opinion piece appearing in The Age on Monday, 8 October 2012, political philosopher and columnist Tim Soutphommasane had this to say about Gangnam Style as part of a broader ‘hallyu’ cultural wave coming out of South Korea:

For many decades a notable exporting powerhouse in manufacturing, South Korea has become a significant cultural exporter in recent years. ''K-Pop'' music enjoys enormous popularity in Asia, as do Korean television dramas. The latter have even found a foothold in places such as Egypt, Iran, Turkey and Eastern Europe.

It isn't simply about culture, however. As Mark James Russell, the author of Pop Goes Korea, has noted in Foreign Policy magazine, South Korean governments have explicitly used pop culture to push more traditional exports. It is striking that ''a relatively small country with a language nobody else speaks could become so trendy so quickly, and convert the new image to economic power so effectively''.
 
As indicated in the Wikipedia excerpt, the current term for this kind of cultural influence is ‘soft power’ (although the less flattering ‘cultural imperialism’ is still commonly used when the cultural exports are from a country which already enjoys a dominant power position).  Soft power is about getting others to want the same outcomes you want without directly imposing your will upon them.  Soft power co-opts people rather than coerces them.

SAMSUNG’S ‘SOFT POWER’

Samsung’s global disputes with Apple are, on one level, about legal and commercial issues – who infringed whose patents, and what are the consequences of this.  But at a more pervasive level they are part of the Korean company's global strategy to develop its public image and cultural cachet.  The battles are not just taking place in the courts, they are playing out in the media which, as we know, actually cares less for the legal details and more for the fact that disputes between big companies which make familiar, everyday products, will bring eyeballs to stories.  And the comments on those stories, in social media, and elsewhere, tell us that many people care enough about these products, these companies, and these brands, to take sides in the dispute, regardless of the legalities.

So even when Samsung loses in court, it continues, slowly, to win hearts and minds, co-opting people to its brand.

The fact is that Apple’s i-devices outsell Samsung's Galaxy products in the US not because they are technically superior, but because they are more ‘cool’ (we know this to be true, because a UK judge said so).

In engineering and technology terms, Apple and Samsung are evenly matched.  Clearly Samsung will not ‘beat’ Apple by technical superiority, and Apple’s current edge derives not from technology, but from its exemplary design elegance and brilliant brand positioning.  Apple products have a place within the culture that will not easily be usurped.  For many iPhone and iPad users, these devices are not just something they use, they are a fashion choice, a sign of identity – a statement about who they are.  Making people feel that way has been part of Apple’s genius.

The question, then, is how a company like Samsung can come to occupy a similar place in the lives of consumers.  To some extent, this will be about the company building a form of ‘cultural confidence’.  While imitation may be a good strategy for catching up with a leading competitor, it does not offer the kind of unique brand identity that enables a company to stand out from the crowd, differentiate itself from the competition, and appeal to the hearts of consumers, as well as their minds.

Win or lose in the short term, Samsung’s strategy makes sense.  By going head-to-head with Apple – on the US company’s home turf as well as in Asia – Samsung demands to be taken seriously.  For its part, Apple’s legal aggression sends the message that it sees Samsung as a threat.  And when the world’s most valuable technology company does that, it can only add to the reputation of the target.

FROM IMITATION TO INNOVATION

There is no question that Samsung has been an imitator in the past.  This pattern has been repeated again and again in Asian economies – first Japan, then South Korea, now China, next (we speculate) Viet Nam – whole industries bootstrap themselves by imitating established models, before eventually gaining the capability and confidence to become innovators in their own right, and strike out in new directions.  Just think about the automotive industry – in the 70’s Japanese cars were derided in the west, while in the 90’s it was Korean cars, yet today Honda, Nissan and even Hyundai are respected brands selling desirable vehicles with a reputation for quality and reliability.  The Chinese will be next.

There is no reason to believe that the same pattern will not be followed in the mobile technology sector.  Our guess is that Samsung is dug in for the long haul.  It is hard to tell whether it actually has a long term plan (yet), but it is telling that Samsung has clearly made a decision to fight, rather than to retreat back to the relative safety of its Asian markets.

COMPETITION IN ‘THE ASIAN CENTURY’

Who would have imagined, at the height of Britney Spears’ success, that she would one day appear on US TV with a Korean pop star, whose songs are not even in English, and that he would be the ‘cool’ one?!

So while, today, if you set an Apple iPhone 5 in front of American consumers side-by-side with a Samsung Galaxy S III, the Apple device has the edge in ‘cool’, there is no reason to think this will always be the case.  Samsung will surely gain in confidence, and find its own identity.  And it will not look like Apple, any more than PSY looks, sounds – or dances – like Michael Jackson.

And it is not just Samsung, and not just Korea, that the established western companies need to be worrying about.  Asian manufacturers already dominate Asian markets, and show no sign of losing ground on their home turf.  Right now, Samsung appears to be Apple's only serious competition in the US smartphone market.  Elsewhere, however, other Asian manufacturers, such as Taiwan's HTC and China's ZTE, are also competitive. These companies are making plenty of sales, and they are not going anywhere.

Apple's position in the US is, in some ways, unenviable. As a market leader, the only direction it can go is down.  And the Asian tigers are snapping at its heels.  Who knows whether Samsung's next product might not be the Gangnam Style of smartphones.

We think we have seen the future, and it does not (predominantly) speak English. Nor does it begin with an 'i'.  Some will choose to fear this future.  We think it could be quite exciting!

5 comments:

vtwkang said...

As someone from a Korean background, I really hope that Samsung one day becomes an innovator, but I don't see it happening any time soon.

I think your analysis somewhat glosses over the significant organisational and cultural challenges that Samsung faces in transforming itself from an imitator to an innovator, if they even choose to go that way in the first place. Perhaps the Japanese were able to do it -- I don't know enough about Japanese businesses to challenge your view -- but regardless, I don't think it's a given that Samsung will turn out that way. And more fundamentally, why would they want to become an innovator in the first place, when they are probably the most successful imitator on the planet at present?

Also, I don't think that Western commentators take into account how imitation has been a fundamental part of Samsung's DNA from its earliest days. My grandfather, who used to work at a smaller chaebol, used to single out Samsung (as opposed to large chaebols in general) for "stealing" ideas from smaller businesses -- and this was back in the 60's and 70's, long before Samsung had any global ambitions.

Compounding this is the fact is that the Korean education system and Korean culture in general are not conducive to producing innovative people. Samsung have been trying to make up for this by recruiting Koreans educated overseas, but from what I can recall, foreign graduates suffer from higher attrition rates -- a testament to the organisational and cultural challenges that Samsung faces.

Patentology (Mark Summerfield) said...

Thank you very much for your comment, and your personal insight into the Korean mentality!

I have visited Korea - and loved the country and the people - but I do not know enough about it to have a firm grasp on how the culture will develop. My experience has been that there are many similarities across Asian cultures (though also many differences). The one I know best is Taiwan - my wife is from there originally, and I have visited a number of times and been 'embedded' with her familiy!

I think that there were similar cultural issues in Taiwan, but they have largely got over them! The example which impresses me most is the GIANT bicycle company. Knowing that there was a perception that 'Made in Taiwan' meant inferior quality imitations, they set about creating a brand that consumers did not know had Taiwanese origins. I think that they were hugely successful in this strategy, and suspect that many people still think GIANT is a US brand!

I am fascinated by this article on Groklaw, which reveals the content of some of the evidence that Apple relied upon in US court to show that Samsung had 'copied' the iPhone. I am inclined to agree with Groklaw that it shows nothing of the sort!

It seems to me that the notes from 'pep talks' held internally to Samsung in February 2010 show a president who is trying to lead a new culture of innovation, and an audience of employees who are having some difficulty grasping the concept! The president says 'make something better, the iPhone is the standard against which all others are compared', and the employees cannot help thinking they are being asked to copy the iPhone.

But no! Says the president... the message is: 'Be creative! Make something new that is intuitive and a pleasure to use'. Apple may be the benchmark, but it is possible to be better without copying!

This looks to me like a leader who is trying hard to drive cultural change within the organisation. As you say, this might be difficult considering that it goes against the broader social culture. But surely there is evidence (including PSY) that Korean people are capable of breaking free of that mold?

I want to see this happen, because the world would then be a more exciting place. So I choose to be an optimist!

Cheers,

Mark

vtwkang said...

Hi Mark,
thanks for your reply.





After
having re-read your original entry, I think the key difference between you and
I is that you place a lot of emphasis on brand. I respectfully disagree with that.
Brand is certainly important, but it needs to be backed up by underlying
innovation and differentiation. Apple is loved not just because it is a
desirable brand, but because of the unique user experience that Apple offers. Apple’s
digital ecosystem delivers an unmatched suite of content and services, and the
intuitive ease of use and integration of Apple’s products are also unmatched. For
Samsung to compete on these fronts they need more than just a strong, unique
brand – they need to create unique products too. I think Samsung’s management
understand these issues but aren’t entirely willing to execute, especially when
it risks jeopardising their core competencies.





With Taiwan
and GIANT, I don’t know if that reflects an underlying change in business
culture and organization, or whether it simply represents astute marketing
strategies. Samsung had a similar image problem prior to the 2000s, and they strategically
invested in marketing and distribution to become a premium brand. But poignantly,
the man responsible for Samsung’s marketing strategy back then – a Korean-American
educated in the US – faced a lot of internal opposition from the more
traditionally-minded parts of Samsung’s management, and he eventually resigned.
Fortunately, his emphasis on brand and marketing doesn’t seem to have been lost
on the company for too long.





I’ve read
the complete pep talk given to Samsung’s designers, but I don’t think it means
too much in this context. Samsung’s problems in creativity and originality in
product development have been apparent for a long time, and Samsung’s management
will certainly understand that change requires more than just inspiring pep
talks. On an unrelated note, I think that design is one area that Samsung capable of being
original (and even beautiful) when it wants to, and I can only conclude in
spite of the talk that Samsung decided to deliberately copy Apple’s aesthetics
for some reason.





I don’t
think we can extrapolate too broadly about Korea from PSY – he’s something of
an outsider in Korea. PSY is US-educated, and he has been fined for drug use. And in his
work, he has played up to that outsider image. Gangnam Style itself is a
critique of the Korean noveau riche. And whilst K-pop artists are generally
young, attractive individuals who promote a happy-go-lucky image, PSY doesn’t
fit that stereotype at all. In fact, PSY may have managed to break through in
the West precisely because his music is so different from mainstream K-pop.
Hell, he even dances unlike anyone else!

Patentology (Mark Summerfield) said...

Thanks for your further insights.

We perhaps do not differ as much as you think on the issue of brand and identity. There are many definitions of the term 'brand', from the most functional (e.g. that a 'brand' is just a name or trade mark, like 'Apple' or 'Samsung'), to the most expansive (e.g. that absolutely everything an organisation does, and everything it stands for, is part of its brand identity).

My view is towards the 'expansive' end of the spectrum. To say that brand is just about desirability is to suggest that there is no substance backing up the style. A major part of the promise of the Apple brand is the unique user experience you mention. When Apple delivers something (like its maps app) which fails to live up to this promise, it gets an absolute hiding from users and the media.

Many Apple advocates complain that Apple as criticised far more aggressively for any imperfections than any other company would be. They are correct, it is! But this is because the Apple brand stands for near-perfection in execution. Expectations are high, so failures to deliver are punished accordingly. Apple's missteps damage its brand, because the day that consumers no longer have these high expectations is the day that Apple is just another one of the pack.

As for PSY's position as an outsider, I agree. The question is whether he represents a temporary aberration, or whether he is a sign of the direction that Korean society as a whole may ultimately move. It is worth bearing in mind that rock'n'roll was once considered to be the 'devil's music' in the west, with adults all terribly concerned about the evil influence it might have on the young. Eventually, however, the values of society shifted in the direction of those early 'rebels', not the other way around.

Time will tell with Korea, I guess.

vtwkang said...

Hi again
Mark.





In my view, the extra scrutiny that Apple faces is just a symptom of its underlying
strength. Apple has faced numerous high-profile controversies in recent times –
Antennagate, Foxconn’s labor practices and Maps – but the company's products are as popular as ever. Again, I think it's the fundamentals that matter the most.





And on PSY –
you’re right of course – we’ll just have to wait and see. A positive trend is
that more Koreans are being exposed to the outside world than ever before, and
those who have been educated overseas are in high demand back home, even if not
all of them adjust well to Korean business culture. Perhaps it’s just a matter
of time as the next generation takes over.





I really do
hope that you turn out to be correct, and I’m just being overly cynical!

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