Korean tech: hot or not?

Going by what Bloomberg's BusinessWeek is saying, it's in danger of being not:

The iPhone's popularity is a sign that Korea may be losing its edge in the international market, despite its reputation as the epicenter of digital cool. The country still rules in hardware, but it is stumbling in software. Samsung and LG, the No. 2 and No. 3 global handset makers, together manufactured nearly a third of the world's mobile phones last year, but their share of the smartphone market was just 4%. That's important because smartphones offer greater profits than traditional handsets, and they are increasingly popular with customers. The Koreans have rolled out models featuring touchscreens, high-resolution cameras, and TV. But they're often clunkier to use than rivals from Apple and Research in Motion (RIMM), maker of the BlackBerry.

Korea's software shortcomings are of growing concern to the country's political and business leadership. On Feb. 4, President Lee Myung Bak convened a special Cabinet meeting to address the issue. Ministers were told the country accounts for only 1.8% of the world market for software of all kinds, even though it dominates sales of memory chips, liquid-crystal displays, and flat-screen TVs. While Samsung sold 227 million handsets last year—10 times as many as Apple—its earnings were lower because its profit margins are much slimmer. "The government had been preparing to shift our focus to software from hardware for about a year, but the iPhone sensation provided a wake-up call," says Lee Sang Jin, who oversees the software division at the Ministry of Knowledge Economy, known until two years ago as the Ministry of Commerce, Industry & Energy.

And it's not exactly clear that government intervention will solve the problem. It seems to me the solution for Korea is somewhere between nudging and not-quite-total laissez-faire. Oh, and getting rid of the things that work in Korea but don't work anywhere else (like, say, ActiveX, the bane of all Mac users in a Korean-language environment).