We talked earlier in our 'Weekly News' series about the major investment from Qualcomm to Korea's Pantech.
Without a doubt, Korea is the global leader in the world in terms of mobile phones. We frequently mention the 'number 1' and 'number 2' in the industry, which is Samsung and LG, respectively. Pantech currently stands at 3rd place.
Never heard of Pantech? I'm not surprised. Allegedly, they are currently competing with LG Electronics for 'second place' in Korea, at least in mobile markets. In 2011, the South Korean company posted 201 billion KRW (out of 3.01 trillion KRW annual revenue) in profit. Last year, their business worsened.
But what doesn't kill you makes you stronger. Investment from Qualcomm will [Pantech] them in terms of IT advancement and credibility," another Pantech official said. Pantech has struggled to transit from feature phones to smartphones - it nearly cost the company its existence (!) but despite much financial turbulence and frustration (of being almost an anonymity in Korea), it claims that it is rebuilding its company where it showed promising performances in the mid 2000s.
As we mentioned before, Qualcomm, a San Diego based mobile giant, invested $23 million in Pantech yesterday. This was to raise the stakes in the company from 11.47% to 13.49% yesterday.
What does it get in return? In return, it will receive 52 million common stocks from Pantech, at 500 KRW per stock. That's about 60 cents. By February 7, it is expected that the transfer of funds will be complete; it is also speculated that Qualcomm will be a major decision-maker in Pantech after becoming the biggest shareholder in the South Korean company.
Qualcomm as Pantech's major decision maker? Is that mere peculation? Korea Development Bank (KDB) currently leads 11 financial institutions. Combined, they have 46.98% shares in the company. So, there won't be such a huge change as it is rumored to be. A Pantech official had said that "[the] investment is great, but there won't be much change on how the company is run."
What will they be Pantech be doing next? Well, its Vega No. 6 smartphone will be launched and will be sold in Korea from February 28th, equipped with Qualcomm Snapdragon S4 Pro quad-core mobile processor. It also has a 5.9-inch HD display.
What does the Qualcomm Snapdragon do? According to their website, its battery lasts longer, improved processing, better graphics, and has greater connectivity. So basically, they're promising "harder, better, faster, stronger" performance. Que Kanye West's single 'Stronger'... which was launched in like... 2008... or something...
Correct me if I'm wrong: I'm just saying that they might be *slightly* late when they're trying to improve the performance. What do they exactly mean and how on earth will they try to overcome Samsung and LG? Oh, and let's not forget about Apple. In term of investment, LG will be spending 19 billion USD on its development across all of their industries. You can read the story on how they will be spending it here.
But I'd be a loyal customer to Pantech if they can provide the above with a cheaper price. Oh yes. Last Friday I tried to get a Galaxy Note II. I ended up going home empty-handed, curled up in a foetal position in bed and cried myself to sleep, cursing my student loans and doomed financial life (being an international student studying Law is a hell of a backbreaker). Sure, Samsung and LG (and Apple) both sell smartphones, but the truth is that they're incredibly, incredibly expensive.
So: will Pantech be a 'Smaug' or a 'Mushu' in 2013? Only time will tell. We will be keeping a close eye on this, and will be writing on any updates. Cheaper smartphones will be great. But then the Apple iPhone 5 is available for $100. So: best of luck for Pantech - it will be interesting to see how they do this year compared with LG, and I hope that they will be able to come 3rd place in USA (at least).