The iPhone excitement showed no signs of cooling over time.
The initial stock of 100,000 units sold out within a week, and Taewoo Electronics' factory was running to fill the shortage.
Because of this, Taewoo Electronics was on emergency alert.
Workers were deployed to iPhone production, requiring overtime and weekend shifts.
As the situation grew busier instead of easing, President Woo Sung-il came to me with complaints.
"Vice Chairman, the entire factory is overloaded. Even if we sell iPhones, most profits go to Apple. Why must we increase staffing at Taewoo Electronics?"
"Who said most of the profits go to Apple?"
"You can see it in the contract, can't you? Apple only pays 3% of sales as OEM production costs. The more we produce, the more losses Taewoo Electronics takes."
He only knew part of the story.
Looking at the contract alone, it seemed Taewoo Electronics was losing money, but digging deeper revealed it wasn't a losing business at all.
"It's true we get 3% as OEM production costs. But you have to consider the royalties Apple pays to Taewoo Electronics too. The more iPhones produced, the bigger the royalties. When you add royalties to OEM costs, instead of deficits, the structure yields us significant profits."
Taewoo Electronics held patents on most of Apple's core technology.
Plus, Taewoo owned 10% of Apple's shares, so even if they barely earned from OEM production costs, they still made a profit.
"I hadn't considered royalties. I apologize."
"You know how much Apple's stock rose after the iPhone launch?"
"I heard it went up over 20%."
"Since the dot-com bubble burst, IT stocks have mostly flattened or fallen. Apple's the only one hitting the ceiling. Taewoo Electronics benefits from that as well."
"...Taewoo's stock price has started to rebound since the iPhone launch."
Even in the early stages of release, the stock price was already responding.
If sales began in Europe as well, Apple's stock could likely return to levels seen before the dot-com bubble.
Taewoo Electronics' stock, which had halved, could also recover.
"Has the semiconductor division's deficit decreased much?"
"The yield rate hasn't reached 70% yet, but it's gradually improving, so the deficit is shrinking."
"If iPhone sales continue, semiconductor demand will keep growing. That will improve the semiconductor division's yield even more."
"That was short-sighted of me. I'll head to the factory right now to personally oversee iPhone production."
Quick reflection is good.
Though he's currently sitting as president of Taewoo Electronics because he listens well, if a better candidate appears, I'll have to replace him soon.
"Wait a moment. President Lee Ju-young of Taewoo Telecom is arriving shortly. There's something we need to discuss together."
While drinking a cup of coffee, President Lee Ju-young arrived.
Like President Woo Sung-il, he had been extremely busy lately and looked quite worn out.
"I've heard Taewoo Telecom is working late every day these days. You must still be very busy."
"Work has increased more than tenfold because of the iPhone. We tripled the number of staff handling phone activations and had to add personnel for app management, so we're struggling with manpower shortages."
Despite the worn look on his face, President Lee had a bright voice.
"Your market share must be rising a lot."
"A lot of customers from other carriers have switched to Taewoo Telecom. If this trend continues, breaking 60% market share isn't just a dream."
"For that to happen, iPhone users must not have complaints."
"There are frequent complaints about the limited availability of wireless internet."
This was an issue I had thought about before.
That's why we installed free wireless internet in university areas.
"Hmm, we should prioritize installing wireless internet where people spend the most time."
"Usually, that would be at schools and workplaces, right? We'll start by installing wireless internet in buildings owned by the Taewoo Group, then expand to the financial district and Yeouido."
"It would be great if wireless internet were available on subways and buses too. I understand a significant portion of students and office workers spend over an hour on public transport."
Before the regression, using wireless internet on the subway was natural.
But in this era, there were places where wireless internet was unavailable and even where mobile signals were weak.
"To install wireless internet on all subway lines, we'll need to negotiate with the Seoul city government."
"They won't oppose it if we offer to install it free of charge."
"The telecom cartel might try to sabotage it."
"If that happens, the Seoul mayor's chances of re-election are gone. Which voter would support a mayor rumored to be blocking wireless internet on public transport?"
Politicians needed money to win elections.
No matter how much the telecom cartel supported them financially, if a negative image built up, winning was impossible.
"I'll start talks with the Seoul city government today."
"And I'd like to install wireless internet in cafes, especially those owned by the Taewoo Group."
"You mean Starbucks?"
Starbucks had secured distribution rights during the foreign exchange crisis.
To date, it had opened over 500 stores nationwide.
"There's no better place to enjoy wireless internet than a cafe. Install outlets for phone charging as well."
"I'll consult with the Starbucks division and move as fast as possible."
An iPhone in one hand and a Starbucks coffee in the other.
This combination was already proven, so there was no need to delay.
***
The iPhone craze continued for over a month.
Naturally, feature phone sales declined, putting CL Electronics' mobile division on high alert.
"When is the iPhone countermeasure coming? It's already been a month!"
"We've received a report from McKinsey!"
CL Electronics wanted to improve by listening to outside opinions.
They commissioned McKinsey, the world's top consulting firm.
"Summarize the report and present it."
"The report says smartphones are still just a minor disruption—a ripple in a teacup. When considering all phone models, smartphone users barely exceed 10%. Therefore, focusing more on feature phones will help increase sales."
McKinsey tailored its consulting based on the client's intentions.
Since CL Electronics expressed a desire to focus on feature phones, the report reflected that.
"So McKinsey thinks the same."
"I tried using the iPhone myself, but it was slower than I expected. It still felt unfinished."
"It looks like the era of smartphones is still far off."
"I believe the right choice is to focus company resources on feature phones rather than smartphones."
"Please expedite the development of high-performance feature phones. What's CL Electronics' strength? Even the iPhone uses our LCDs. So all we have to do is make high-spec displays and produce high-performance feature phones."
From a future perspective, CL Electronics' judgment was wrong.
The iPhone's arrival marked the inevitable decline of feature phones and the rise of smartphones dominating the market.
But this was something only those who knew the future could say.
Since CL Electronics already held various technologies related to feature phones, focusing on feature phones made sense for immediate sales improvement.
The present and the future—decisions depend on which to prioritize.
CL Electronics decided to focus on the present rather than the future.
***
At the same time, an emergency meeting was convened at Samsung Electronics.
Chairman Oh Hee-gun personally attended, and it was a large-scale meeting with all company executives present.
"I've used the iPhone myself. It's such an amazing device that it makes you doubt whether it could have come out in this era. But looking at the components, most are produced by our Samsung Electronics. So why can't we make a phone like this?"
"Apple completed the iPhone based on its failed product, the MessagePad. Because of that, there was a forecast that the iPhone would face a similar fate."
"Well, I'm not here to blame you all. We achieved global number one with feature phones. But shouldn't we also be number one in smartphones?"
Chairman Oh said this as a matter of course.
He had repeatedly emphasized that all Samsung products must be world leaders.
"The moment you become number one globally, sales double or triple. We're number one in feature phones, so we must be number one in smartphones too."
"Right now, all our resources are focused on feature phone development. If we start smartphone development in this situation, we risk losing both."
"Stop saying what can't be done, what won't work. Do you know why 'can't' comes out so easily? Because you don't care about the company. And it's irresponsible! The first word out is 'can't' because no one wants to be responsible!"
Chairman Oh shouted.
All the executives gave a stern look to the mobile division president who had foolishly provoked the chairman's ire.
Still, President Lee of the mobile division continued without regard.
"This is a time for choice and focus. To maintain the number one position in feature phones, we must focus all our energy there."
"Sigh, you can never be a champion by fearing change. I rarely say 'never.' But if we don't change now, Samsung will never become a global leader."
"..."
President Lee finally stopped speaking.
He realized how strong Chairman Oh's resolve was and judged that nothing he said could persuade him.
"Those afraid of change don't have to change. Do it voluntarily as you see fit. Those who want to change a little will change a little, and those who want to change a lot will change a lot. I can wait as long as I need to. But don't hold others back! That's the rule."
"I will keep the chairman's words in mind!"
"In the process of change, if you keep challenging, you'll make plenty of mistakes. It's perfectly fine to make mistakes here. All mistakes in this process become assets. That's what I'm saying!"
Samsung Electronics made a different choice from CL Electronics.
CL Electronics chose to focus on feature phones, while Samsung Electronics decided to develop both feature phones and smartphones simultaneously.
This caused dissatisfaction among Samsung's executives.
They couldn't understand Chairman Oh Hee-gun's insistence on developing smartphones as well, especially when focusing on already successful feature phones would have been enough.
But Chairman Oh's word was law in the Samsung Group.
Whether they liked it or not, Samsung Electronics had no choice but to start smartphone development.