Cellphone Company Makes A Call: Korean Americans

By Sara Kehaulani Goo
Washington Post Staff Writer
Monday, June 26, 2006

When Helio LLC wanted to market a new $250 ultra-high-tech cellphone this year, it targeted three distinct groups: spoiled teens, tech geeks and Korean Americans.

Korean Americans make up less than 1 percent of the U.S. population, but U.S. telecommunications firms take note of them because their kin across the Pacific are among the most tech-savvy people on the planet.

South Korea has wireless broadband service from the subways of downtown Seoul to the country's mountainous national parks. For some time now, the nation's young people have used their cellphones more often to send text messages and upload pictures than to talk. Korean adults commonly conduct their online banking with cellular devices, and teenagers spend hours playing video games on their phones.

Some Koreans who come to the United States find it's like going back in time a few years: They have to give up gadgets they're used to. So Helio decided to tap them as a unique market, a laboratory of sorts for germinating products they hope will catch on nationwide.

Marketing firms say telecom companies have always targeted Asian Americans because they are heavy phone and data users and have lots of international connections. But Koreans offer a special opportunity because of the way their culture uses technology.

"When I was in Korea, I went through so many demos about what they're using [cellphones for], from monitoring your dog's food and water to the electronic wallet," said Gary D. Forsee, chief executive of Sprint Nextel Corp., which has allowed Helio to piggyback on its network for a fee. The possible applications in the United States, he said, are "almost unimaginable."

Even so, some analysts think the industry's obsession with Korea can lead to misplaced assumptions. "It's a mistake to sort of religiously adhere to the notion that a market like the U.S. is going to faithfully replicate the Korean experience," said John Jackson, an analyst at Yankee Group who covers the wireless industry. "Are we in a few years going to be consumers who listen to music, download video and broadcast TV on our phones? Of course. But you have to take into account that every market has unique demand-side characteristics and the U.S. is an extremely diverse market."

There are signs that Americans want to use their cellphones to do more than talk, but so far the numbers are small and segmented. ESPN, owned by Walt Disney Co., has a popular phone that delivers sports scores. Amp'd Mobile Inc., a start-up backed by Viacom Inc., Qualcomm Inc. and Intel Corp., is selling a youth-oriented phone with video, music and fancy ring tones. Like Helio, those companies have attracted investors who have poured hundreds of millions of dollars into high-tech phones. Now they must find a slice of early customers and then hang on and wait for the larger population to catch on.

Thirty-five percent of U.S. mobile-phone customers use their phones to send text messages, according to an M:Metrics Inc. survey taken in April. Nearly 10 percent purchased ring tones or browsed the Internet on their phone for news and information, M:Metrics said. More people are sending photos via cellphones; M:Metrics found a 30 percent increase from January 2005, to about 11 percent of customers in April.

"It is slow," said Seamus McAteer, senior analyst at M:Metrics, a firm that measures trends in the mobile-device industry. "But there's a misconception out there that the U.S. is backwater." In a comparison with European countries, Britain leads in terms of use of mobile Internet-based services, but the United States is ahead of France and Germany by a significant margin when it comes to downloading ring tones, for example.

Last week at a strip mall in Beltsville, Daniel Kim and his wife Samantha got a chance to see the Helio phones they had only read about in local Korean newspaper advertisements.

The English version of the Helio phone introduced in April comes with unlimited text messaging, customized streaming news from 10 Internet sources, video and music downloading, a high-quality digital camera, speakers, and instant access to MySpace.com. The Korean version, called Helio by SK Telecom, also comes with Korean characters on the keypad and features Korean ring tones, video ring tones, instant text messaging to Korea and, of course, karaoke.

Samantha Kim's parents live in Korea, and she often buys prepaid phone cards to talk to them, at 4 cents a minute. When her current cellphone contract is up, she plans to buy the Korean version of the Helio phone so she can call and exchange text messages with them.

"Her parents live in Korea and with that [Helio] phone, you can text anyone in Korea. The layout of the keypad in Korean, with the language, it's easier to type," said Daniel Kim, 29, explaining the popularity of text messaging in Korea. "On the other hand, if you want to type in English, you have to push the same button three times."

Daniel Kim, who was born in Korea but raised in the United States, said it made more sense for his wife, who grew up in Korea, to get the Helio phone. He wants a souped-up flip phone offered by Sony and Cingular, which has a built-in MP3 player. "I don't have an iPod," he said.

The Kims' divided response to the Helio phone explains why targeting Asian Americans or any ethnic group is dicey. Within ethnic groups, consumers can be segmented, with some age groups preferring English, others preferring the native language and still others equally comfortable in both languages and cultures.

About 70 percent of all Koreans surveyed in the 2000 U.S. Census said they were not born in the United States. Compared with other ethnic groups, Korean immigrants and Korean Americans more often prefer speaking in their native language even if they have lived in the United States for a long time, according to Kang & Lee Advertising, a firm that specializes in Asian American marketing.

"It's no secret that telecom companies are targeting this group," said Larry Moskowitz, vice president of strategic marketing services at Kang & Lee. Asian Americans generally are a lucrative market because of their higher education levels, income levels and frequent long-distance calling. The Helio phone sounds like it's "not for every Korean American immigrant," he said.

"It's probably after the early adapter, the low-hanging fruit," Moskowitz said. "The [first-generation] deli owner is not jumping in on this."

Paul Son, a 30-year-old recent MBA graduate of the University of Maryland at College Park, would be a target customer for Helio by SK Telecom if he weren't heading back to Korea next week. Having spent the past few years in the United States for school, Son said he was amazed that he couldn't get even cell service on his standard-issue LG flip phone in some of the campus buildings. Last week, he visited a cellphone company to turn in his phone as he heads back to Korea for a job at Hyundai. "You think I'm going to miss this?" he said, laughing.

"Most Koreans think the cellphones here are outdated," said Paul Jeong, owner of PJ Wireless, one of a half-dozen Washington area stores that sells the Helio phone. Most of the Korean customers who walk into his store, located in a small strip mall near a Korean grocery and Korean video store in Beltsville, have already heard of the phone from the advertising campaign Helio is conducting on Korean cable TV, radio, billboards and local newspapers in Los Angeles, San Francisco, New York, Chicago, Seattle and Washington. Actor Tom Cruise and Korean golfer Pearl Shin have been spotted with Helio phones. Locally, Helio's ads in the Korea Times and Korea Entertainment News, a weekly tabloid, translate loosely as "changed life, Helio world."

It's too early to tell whether the message will translate into sales. Helio began selling phones in April and is tight-lipped about sales so far. The Helio Kickflip sells for $250; the Hero model costs $275. In addition to the cost of the phones, service costs $85 to $135 a month, depending on the number of minutes.

In some areas, the task of establishing the brand has been made more difficult by competitors, which Helio said are pressuring distributors not to carry its Korean-branded phone. A letter from a T-Mobile executive obtained by The Washington Post threatens to withhold T-Mobile products from dealers that offer the Helio and Amp'd phones.

"We hope independent dealers will want to sell primarily our product," said T-Mobile spokesman Tom Harlin.

© 2006 The Washington Post Company