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The First Venture Myth: Pioneering the PC Industry

Posted May. 20, 2005 23:30,   


People assembled around a square box made by iron boards in an office in Cheonggyecheon, Seoul in January 1981. On top of the box, there was a TV set instead of a computer monitor. It was the “SE8001,” Sambo Computer manufactured as the first personal computer (PC) in Korea. The person who made this product was Lee Yong-tae, honorary chairman of Sambo. He is widely recognized as the first venture businessman to nurture the information-oriented society.

The news has gotten many people frustrated that Sambo asked for a court receivership on May 18 after financial difficulties. This is because that the 25-year period was the history of venture business and PC industry in Korea at the same time.

25 Years of Sambo Computer

It was in July 1980 when Lee established Sambo Computer. The initial capital was only 10 million won. At that time, the word “PC” itself was very new to common people. The second PC he invented was smartly designed and compatible with software made for Apple computers. This product was exported to Canada in November 1981, and it was the first Korean PC to be shipped abroad. Sambo Computer grasped first place in terms of market share, while beating its formidable domestic conglomerate competitors such as Samsung, Gold Star (now LG), Daewoo and Hyundai in the 1980s. The main key to this success was Sambo’s technology.

In the 1990s, Sambo Computer exerted its muscle to the extent that it was more like a group. It had 30-plus subsidiaries, including Narae Mobile Telecom and Thurunet, under its umbrella. However, it did not take a long time for Sambo to face a crisis. Its beeper and citiphone businesses, which Sambo had pursued with great ambition after its great success in the PC field, suddenly collapsed with the introduction of the mobile phone. Sambo was near bankruptcy in 1998 when the Korean economy was stricken by a financial crisis. But Lee showed his great management expertise amid the serious situation.

In November 1998, Sambo introduced “e-Machines,” an extremely low-priced computer in the U.S. market. The selling price was only $499, which was lower than half the price of computers its competitors produced. E-Machines turned out to be a great success. Its market share increased up to the third position in the U.S. market, while surpassing its competitors such as IBM, Acer, Apple, and Gateway. Buoyed by the trend, Sambo listed e-Machines on the Nasdaq in 2000.

However, the year 2000 turned out to be Sambo’s turning point. The PC myth, supported by extremely low prices, returned to Sambo like a boomerang. The PC industry was transformed into a labor-intensive industry where parts were simply assembled, and Sambo could not survive when its competitors in China and Taiwan rushed in with much lower prices. Sambo’s sales volume plunged down to 2.1812 trillion won from four trillion won in 2000, and its operating loss amounted to 23.4 billion won.

A Man On a Mission to Make Korea an Information-Oriented Country-

Lee was a professional manager with an engineering background who majored in physics at Seoul National University and studied statistical physics at Utah State University in the U.S. He became interested in information technology while working as a computer operating manager at KAIST. He often says that “I believe that I have a mission to make Korea an information-oriented country. A man on a mission should recommend what he believes to people who are not willing to listen to him.” He was the entrepreneur who established Sambo, and he also took many important positions in Korea’s information technology industry, such as the first CEO of Dacom, and manager positions with the Korean Institute for Electronic Commerce, Advanced Institute of Information Technology, and IT Research and Consulting.

He was also named as Minister of Information and Communications several times, and he voiced his ideas in designing major policies. One of the many ideas that Lee has come up with was the well-known policy statement that Korea should raise two million people specializing in software business.

After its court receivership is resolved, can Sambo Computer start its business again? Sambo is still boasting of its competitive technology and distribution network. However, it seems clear that the first venture businessman will remain as a myth for now.

Suk-Min Hong smhong@donga.com