Riding along 'horizontal verticals' in Magok District (Part II)

This is the second part of my focus on Magok District:

1. Framing Magok (Part I - Location)
2. Magok's horizontal verticals (Part II - Cluster)
3. Magok's lifespace (Part III - Environment)

***

2) Magok's horizontal verticals

In the first part we saw how, by its simple location and connectivity, Magok District enjoyed key assets for a business hub. In the third one, we'll see if its environment can, as advertised, attract researchers and creative minds. Here, we'll focus on the innovation cluster promise.

The signature used in recent advertorials sounds familiar, and as usual with previous Korean projects sharing similar ambitions in the past, 'Korean Silicon Valley Magok' ("한국의 실리콘밸리 마곡") is supposed to create a haven where big fish and small fry cohabit. But as usual, chaebol struggle to envision innovation clusters beyond proprietary ecosystems, which can become a major hurdle for diversity and creativity (see "Redrawing Korean Maps - Innovation Clusters").

Magok doesn't aim at aggregating value around business 'verticals' like the Sangam DMC, conceived as the name suggests for media and entertainment, or even Songdo, when it was desperately looking for a way to reboot and better market itself. Here, we're into 'convergence and fusion technology', more in the Pangyo Techno Valley vein, but with a stronger industrial - manufacturing touch.

As the first big fish to sign for this former swampy rice paddy area, LG Group set the tone for 'convergence and fusion', pooling Research and Development teams from key subsidiaries (LG Electronics, LG Chem, LG Display...) in its LG Science Park complex (18 buildings, capacity of 25,000 employees) to better tackle such challenges as robotics or A.I.. Similarly, Lotte Group is looking for new synergies between Lotte Food, Lotte Confectionery, Lotte Chilsung Beverage, and Lotteria...

Should we dub this higher stage of chaebolism 'horizontal verticals'?

Clockwise, the site of Tadao Ando's future LG Art Center / LG Science Hall, LG Science Park's ISC (Integrated Support Center), Kolon One and Only Tower.

LG Science Park Integrated Support Center (www.instagram.com/p/Bi8rK-slfWJ)

LG also provides the neighborhood with a cultural venue designed by Tadao Ando. The new LG Art Center will open in 2020 on Magokjungang 10-gil, across the LG Science Park and next to the park itself. The group will operate the theater for thirty years before offering it to Seoul city.

It's way too early to judge this new ecosystem, particularly since, like in the DMC, small players are supposed to join after the big ones. Urbanism and architecture can give us clues about the potential, though. For instance, LG Science Park can look like series of containers from a distance, but many buildings are porous, with atria and green walkways, giving the ensemble a campus-like touch, more open to its surroundings than other, more monolithic centers.

Unlike the actual Silicon Valley, where most companies of all sizes and shapes settled in existing urban or peri-urban environments, this research complex consists of contiguous lots, most of which will be developed by one powerful player. So if you're having a coffee in the Eastern half of Magok District, chances are it will be in a building owned by one of those, which may alter the way you pitch your startup over a cup of java.

***

If Magok District will welcome garage startups, they are not its main target. The aim is to boost innovative research in industries that do have fuzzy edges, but also complex cores and cycles, and it already signed enough significant players to succeed. More will want to join in a site ideally located for logistics and within the capital city, but quality of life will also be a factor. Ideally, Magok's environment must stimulate creativity, but in not necessarily too 'speedy' and disruptive ways. 

Is it likely to deliver? That's what we'll check in our last part of this focus.
 
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Korea revives the project of a fourth mobile license

According to The Korea Herald (May 29), the Korean government is considering reviving the project of a fourth Mobile Network Operator license as part of a plan to stimulate the market.

Is there a need for another 4G network? Korea is well covered with LTE to LTE-A, beefed-up locally through pervasive femtocells and WiFi. And the three incumbents don't want to sit on their laurels: Korea Telecom promised 5G trials for the 2018 Pyeongchang Olympics, and SK Telecom announced a partnership with Google on augmented reality ("T-AR for Project Tango").

Is there a need for more competition? It depends on the profile of the new player, and the impacts on a M-VNO ecosystem that, at long last, is biting into a pie still dominated by SK Telecom, Korea Telecom, and LG U+.

According to the Ministry of Science, ICT and Future Planning (MSIP), Mobile Virtual Network Operators were claiming a 8.8% market share as of April 21 (up from 2.9% in June 2012), thanks to prices on average 57% cheaper than the MNOs.

But it's not as if you had one fourth player with a 8.8% market share, big enough to contest the leaders on more profitable segments. Today, Korea has 27 M-VNOs, most struggling to make their first profit, and likely to never see it. Significantly, their number of subscribers started to explode when they targeted more discount-seeking audiences (the youth, Chinese migrant workers...).

A perennial candidate for the 4th spot is actually a consortium of M-VNOs: KMI (Korea Mobile Internet) revived their candidacy in October 2013, and defending the existing M-VNO ecosystem could be a stronger argument today. In December 2011, the Korea Communications Commission not only rejected KMI's bid, but also that of IST (Internet Space Time lost the backing of Hyundai Group at a critical moment). Note that the KCC also canceled the auction for the WiBro spectrum. I explained a few months earlier ("A Kbiz MNO ? SMEs vs Korea Inc") how the attempt by the Korea Federation of Small and Medium Businesses (Kbiz) to enter the market looked more like a lobbying stunt to push WiBro.

A much bigger fish could also seek the fourth license, with more brand power. Typically, CJ Group is already a major player in telecom, IPTV, or multimedia contents. It has the money to invest on new networks (Daum Kakao or Naver would need serious backing), the customer bases to leverage, and the contents to fill the pipes..., but don't bet on price wars with fellow chaebol on the juiciest segments. 
 
A true new entrant from overseas? Global MNOs know how difficult it would be in a country where foreign majors are seldom allowed to take or maintain leading positions (see retail for example: Carrefour and Wal-Mart already gone, Tesco on the back seat). But joining a consortium, or creating one remains a rare opportunity for international platforms to push their solutions in an otherwise locked Korean market. And nowadays, the dominant platforms do not necessarily belong to telecom operators...

Anyway, expect more lobbying ahead of the government's guidelines, expected by the end of June.

• Initially published on mot-bile ("Korea's fourth license reload"). 
• See also "Daum Kakao, Google Campus... Korean platforms on steroids", other posts related to innovation in Korea.

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* "Consortium to bid for 4th mobile carrier in S. Korea" (Yonhap News - 2013/10/08)

The Bigger, The Bitter

Yesterday, Daum and Kakao Corp announced that they would merge on October 1st, and Google that its first Google Campus in Asia would be located in Seoul.

The Daum Kakao merger looks rather defensive: before everything, it creates a stronger competitor to NHN, the leader operating among others the main rivals to Daum and Kakao Talk: Naver and LINE.

NHN and Daum are rare exceptions as successful newcomers in a country where start-ups struggle to survive in an ecosystem dominated by chaebols: as soon as a new gem shows some potential, the big fishes try to eat it, or to destroy it with me-toos leveraging on in-house countless entry points, or to control it by becoming its sole 'partner'. 

NHN and Daum could storm the web at the turn of the millennium, when mobile operators where busy building proprietary environments, and other chaebol focusing as usual on hardware. They built competitive platforms that even resisted Google, who only managed to gain strongholds in Korea thanks to Android. Typically, even if Naver maintains its leadership in web searches, Google could 'crowd-boost' Google Maps or Google Translate, with the help of smartphone manufacturers who were too happy to have a platform rivaling Apple to care about the hidden costs.

As we've said before, Samsung and LG helped Google BtoB (OEM) succeed where Google BtoC (portal) failed, and all they can do now is send a Tizen to nibble at the heavyweight champion's ears. 

There's a finite space for major value aggregators in Korea, and as Samsung's latest attempt to build a sustainable platform beyond hardware, Tizen probably accelerated the need for rivals to stretch their reach.

Big G needed to beef up its Asian ecosystem and Korea seems the perfect choice: Android rules, start-ups need competitive platforms to survive chaebol bullies, and Mountain View has the opportunity to weaken some of its most serious competitors on their own turf. Bonus: by supporting Korea's SME and creative ecosystem, you gain the favors of local authorities and regulators.

Anyway, good news for Korea's attractiveness... but yet higher entry barriers for potential major newcomers.


(initially published on my innovation blog as "Daum Kakao, Google Campus... Korean platforms on steroids" - see all posts related to Korea)




ADDENDUM 20140828: let's guess which 'independent' whistleblower suggested Korean watchdog to investigate Kakao Corp in the wake of the merger ("Kakao under probe for allegedly abusing market power: sources")


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Magok District: SIM City as in "Seoul Intra Muros"? Alleyways as in "Seoul Inter Muros"?

I know, Gangnam Style is so 2012, and here we are, starting 2013 on the same side of the river.

Same side, but different neighborhood: Gangseo-gu doesn't look as sexy as PSY's lair, and the Lotte Mall Gimpo Airport as bling bling as Cheongdam-dong boutiques. Yet here as well, plastic surgery is underway on a grand scale.

Seoul's westernmost district is the place where I first set foot in Korea. In 1991, "Kimpo Airport" still ruled as Korea's main international gateway*, and since Seoul Subway Line 5 would only be inaugurated four years later, everybody reached the capital via the airport road (now Gonghang-daero); a rather unspectacular journey through a peri-urban to sub-urban landscape featuring fields, farms, scattered low-rise buildings, and one plastic dummy traffic cop supposed to scare the fast and the furious away.

Last spring, I taped this boring scene from a cab on the same road, but in the opposite direction:




Between Balsan Station and Songjeong Station (Subway Line 5), all you could see for 2 km were crane tops emerging behind these grey construction fences. Halfway, Magok Station remained closed. Like the yet-to-be-inaugurated Magongnaru Station, a couple of blocks to the north, on the parallel Seoul Subway Line 9 (between Yangcheon Hyanggyo Station and Sinbanghwa Station). The two ghost stations - three if you take into account the fact that Magongnaru is also on the AREX line - lie in the middle of the future Magok District, one of the biggest and least advertised urban developments in Seoul.

You would think a project covering 0.6% of the capital city (3.6 million square meters in Magok-dong and Gayang-dong) would get some attention, but Magok has been droning below the radar for years.

To be fair, there was a decent embryo of buzzlet back in 2005, when the MRC (Magok Research and Development City) was announced, and the buzzwords of the day thrown in for good measure ("green", "U-city", "hub", "international business complex", "knowlegde industry complex"...). As if local authorities had suddenly realized that they'd been sitting on a goldmine for too long, like: everybody's building a global hub in this country except us, and we've got this vast piece of land in Seoul intra muros, next to an international airport, with a unique air-water-land combo**. Let's build and they will come. All we have to do is to make sure we've got dwellings, businesses, industries, and a "Central Park" - foreigners love central parks. 

So everything was set: between 2007 and 2014, SH Corporation would erect yet another successful new town in the country of the perennial real estate miracle.

But even before Lehman hit the fan, no one seemed to care. Pangyo New Town was still the media darling, and Incheon city marketing Songdo, a similar concept on steroids: 6.1 M square meters vs 3.6, the sea vs the river, Incheon Airport vs Gimpo Airport, Gale Intl + Posco vs SH..., and an even bigger "Central Park".

We've already seen how Songdo struggled in the past***. And Magok District was not even the priority for Seoul Metropolitan Government, which had first to launch the Digital Media City, or more recently the International Finance Center (not to mention yet other fishes to fry, such as the Gongneung Future Industry Technology Complex).

But MRC was more than a mere background task. It had an important part to play in the Seoul 2020 Vision, and in 2008, an international design competition generated spectacular proposals for the future Magok Waterfront, reviving the hope to see things happen in spite of the gloomy context. Two years later, development plans had been revamped, paving the way for a more consistent construction kick-off in 2011. I really felt something big was coming last september, when I chatted with the head of Seoul Business Agency before the conference for the 10th anniversary of the DMC project****. He confirmed the city's determination for Magok, and his confidence seemed genuine.

Last November, Seoul Metropolitan City started offering parcels for Magok Industrial Complex: the future research hub (IT / Information Technology, BT / Bio Technology, GT / Green Technology, NT / Nano Technology...) will cover a fifth of the district and a 2007-2031 timeframe. Seven companies were later selected for further discussions, and the first really big media bang came on December 13, when LG Group signed for 6 of his research units and 14,000 researchers by 2020. Note that this chaebol had already been involved in this future "smart city" through its LG CNS subsidiary, designing a "Smart Green Control Center" in partnership with IBM.

Daewoo Shipbuilding and Marine Engineering and E-Land were listed among the other hot prospects; not exactly poster boys for the above mentioned technologies, but very significant players nonetheless, particularly considering DSME's growing ambitions in defence. Now the focus is on signing an international player to confirm this excellent first draft.

Generally speaking, if you're into IT-media-telecom convergence, there are worst places in the world to open a R and D unit than this part of Seoul. Mapo's Digital Media City and the Guro Digital Industrial Complex are quite close, and the LG-SMG deal already includes at least two gems: LG Electronics and LG Display (these guys will probably meet their LG Telecom friends in the DMC more often than indie start-ups in Guro but that's their problem).

Note that in the fierce coopetition among major business hubs in Korea and particularly across Sudogwon region (Seoul - Incheon - Gyeonggi-do), the "Seoul Intra Muros" dimension in itself has become again a key factor of differenciation, particularly to recruit talents who would rather stay in the capital than move to a distant "greenfield new town". E-Land highlighted this HR premium in its own Magok's plus column... where "cost of land" certainly ranks higher than "culture" (with all respect due to Yangcheon Hyanggyo).

I won't repeat my usual pitch about the non-zero-sum-game of Korean new towns (see for instance "Wet eyes for wetlands and urban mirages"), but we're not just talking about business here. People will live and breathe in Magok District, not just work. There's enough space and time to get it right, and I'd like Magok to achieve something different, something more ambitious in the noble sense of the term than the DMC which, architecturally and street-wise, could almost be any business district in any big city. 

On this rendering where Seoul Housing Corporation mercifully banned very high rise buildings and added more green (BTW will they dare destroy the beautiful tree line that somewhat managed to survive in the video above?), Magok District almost looks like any New Town:

Even more so when you look at the ad:

Guess what: Seoul is not a new town. Furthermore, a neighborhood needs a soul of its own, must belong to a certain continuum, and souldn't be overly scripted: if urban planners do all the storytelling, how can citizens hear their own voices, write their own stories?

And Seoul needs alleyways. By "alleyways", I don't necessarily mean the last capillaries irrigating the actual "Seoul Intra Muros" ("Sadaemun", the original city surrounded by its fortress), but also the kind of inclusions that extend Seoul, the places where the city can freely and randomly stretch, grow more complex, and reach deeper, these intimate scars where your own mind can't help but wander.

This so special "Seoul Inter Muros".


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* The earthwork was just starting for the merger of the two islands that would eventually host Incheon Airport (we used a ferry to reach them and a bus to go all the way to Eunwangni). Reminder: Gimpo Airport is not in Gimpo city, Gyeonggi-do, but within Seoul limits, in Gangseo-gu, a district that happens to border both Gimpo and Incheon cities (not to mention Bucheon and - via the Banghwa Bridge - Goyang, also in Gyeonggi-do).
** Air: Gimpo Airport / Water: Han River + a vertical streamlet potentially upgradable into a marina or else / Land: SW Gyeonggi and Incheon entry point + major highways + Olympic Expressway + Subways...
*** and succeeded as well (see "Songdo on the world map (Green Climate Fund)", and all posts related to Songdo)
**** about this event, see "Korean culture or Hallyu, Cultural contents or discontents"

Korea Inc. united for mobile payments

Ten years ago, SK Telecom would carpet bomb Korea with 400,000 terminals ("dongles") to boost its Moneta mobile payment service. Yesterday, Korea Inc. announced 300,000 NFC-enabled Point Of Sales by the end of 2011 to put the country ahead of the pack in this very very strategic sector.

The difference ? This is not a solo act anymore. SKT alone couldn't succeed in setting the new standard in mobile payments at home and pushing the concept overseas, but this time, the whole value chain and ecosystem is following. And if it works, each player will claim a nice slice of a much bigger pie.

Under the regulator's umbrella (KCC, the herald of "NFC-based Mobile Smart Life Services"), over thirty Korean CEOs met at the Seoul Press Center to sign this decisive MOU in Near Field Communications, and if you throw in the members of the recently formed Grand NFC Korea Alliance, you've got the closest thing to a mobile payment dream team :

- all 3 Mobile Network Operators : Korea Telecom, SK Telecom, U+ (LG Telecom)
- the biggest card players around : Visa, MasterCard, Shinan Card, Kookmin Card (KB), Lotte Card, Hyundai Card, T-Money, MNO partners (Hana) SK Card and BC Card (KT)...
- key authorities and associations : KCC, ETRI, TTA, KISA (Korea Internet & Security Agency), MOIBA (Mobile Internet Business Association), RAPA (Korea Radio Promotion Association)...
- top manufacturers : Samsung, LG, Pantech...
- top enablers: UbiVelox, KEBT, MtekVision, 3ALogics Inc, KICC...
- top payment enablers / billing service providers : KSNet Inc, Mobilians, Galaxia, Danal Corp., KCP...



The only players missing on the picture are the endusers.

And as we saw before, pedagogy will be key in a country where hacking happens to be a national pastime (if you include North Korea in the package), where few people protect their handsets with a PIN code, and where distrust in smartphone security keeps spreading like wildfire.

Of course, "Near Field" meaning 10 cm and below, close encounters of the third thief will require more intimacy than via Bluetooth. Besides, many Koreans are already used to contactless micropayments thanks to T-Money (ie Seoul public transportations and taxis, thousands of convenience stores and vending machines...). Furthermore, NFC trials have been under way for quite a while : for instance KT's "Mobile Stamp" couponing system, SKT's Mobile Commerce Zone or Q Store pilots, or cross border trials between SKT's T-Cash and Japan's KDDI and SoftBank...

This MOU aims at multiplying testbeds and giving momentum to the technology, the bulk of the infrastructure being planned for Q4 2011. So where will NFC-based payments be available ? GS group plans to implement them in its convenience stores (GS25) and gas stations (GS Kaltex). Major retailers (Lotte Mart, Emart...) are joining the party. Seoul and Gyeonggi-do buses and subways, as well as many taxis will be converted. A major shopping area for tourists (particularly from Japan), Myeongdong has been identified as a strategic hotspot to feed the buzz.

Needless to say, the number of NFC-enabled handsets is another essential element in the equation. The alliance targets an ambitious 5 M units by the end of the year, leveraging on existing devices (Samsung Galaxy S II and Sky Vega Racer opened the way), and the Google-Apple war : since Android Gingerbread OS supports NFC, Cupertino had to consider it for iPhone 5.

And oh. This non-event : Samsung is expected to surpass soon Nokia as the world's top handset manufacturer.


Seoul Village 2011 - initially published on mot-bile (see all posts related to wireless in Korea).
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* sorry, not yet in English : "국내 통신사·금융(카드)사 CEO 최초로 한자리에 모여 NFC 서비스 활성화를 위한 MOU 체결"