Fighting the Slowdown by Lowering Mobile Phone Prices

Domestic prices of mobile phones, which had no limits, have started to drop considerably in the past few months. According to the mobile phone industry on Sunday, Samsung Electronics reduced prices of 23 of its handheld sets, which are on sale now, starting in March, by about 33,000 won.

This is the first time that the company, which had previously employed a "high price policy", decreased prices.

As a result, the price of Samsung Electronics’ newest model (SCH-V300), through which "June," SK Telecom`s third generation multimedia content, is provided, decreased 30,000 won to 620,000 won beginning in March. In late February this model was in short supply, so it was difficult to purchase even for one million won.

In addition, the price of its camera-equipped handheld set (SCH-X780) decreased by 44,000 won, with the model currently on sale for 470,000 won.

With Samsung Electronics leading the price-cut campaign, LG Electronics is following suit. The company lowered prices on its main products by some 30,000 won. According to this price cut policy, consumers can buy its SD-2100 model, which is the most popular among its camera-equipped mobile phones, for 374,000 won and the SD-1200 model for 270,000 won.

The price-cut competition this past month is new to the domestic mobile phone market, previously thought relatively safe from economic downturn. The mobile phone industry says that even though mobile phone consumption was high in February due to commencement ceremonies, there were only about one million units sold, as compared to 1,353,000 units in the same period last year.

Meanwhile, some industry experts predict that the current poor sales are due to the current economic slump and to people’s expectations for price cuts because government subsidies for the industry will start in April and many consumers are putting off plans to buy new phones.

According to the Ministry of Information and Communication (MOIC), however, the subsidy is limited only to some items including PDAs and older mobile phone models, so it is not related to the mobile phones that consumers usually purchase.

"We plan to finally decide on the subject of the subsidy after consultation with related government ministries and agencies,” Seo Kwang-hyun, senior official with the MOIC said. “The latest models such as the EV-DO model for third generation multimedia service are exempt from the subsidy."

Jong sik Kong kong@donga.com