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[Newsmaker] Daum Kakao eyes growth as platform provider

Oct. 1, 2014 - 21:45 By Park Hyung-ki
Daum Communications and Kakao Corp. have joined forces and are looking ahead to an era in which everything is connected to the Internet.

After five months of consolidating the two entities and their corporate cultures, the newly merged 12 trillion won ($11 billion) company will henceforth be called Daum Kakao.

With a new black-and-white logo and the new slogan “Connect Everything,” Daum Kakao chief executives Choi Sae-hoon and Lee Sir-goo say the company aims to grow as a platform service provider that not only helps people communicate, but also connects them with information, businesses and objects.

Everything is set for the company to start afresh and create more value-added mobile services using each other’s strengths, they said, noting that internal teams and units have been reorganized and employees and executives will address one another using their English names to create a horizontal management structure.

Roles and assignments have been given ― the two CEOs will be in charge of the company’s daily operations, but key strategic decisions will be made by its biggest shareholder and board chairman, Kim Beom-su, known as Brian within the company. 
Daum Kakao CEOs Choi Sae-hoon (left) and Lee Sir-goo pose for a photo in front of a new corporate logo at a launch event in Seoul on Wednesday. (Daum Kakao)

Kim founded Kakao, the creator of Korea’s most-used mobile messenger KakaoTalk, and other applications such as KakaoGame and KakaoPay. Daum founder Lee Jae-woong will remain a shareholder with a 3.3 percent stake in the merged entity.

While Choi and Lee stressed the importance of generating synergy last May when they announced their decision to merge, now their focus is on becoming a successful platform through partnerships.

“We will try to create various services with partners,” Lee said.

Kakao has gained a competitive edge in mobile communication, and the strong suits of Daum, Korea’s second-largest search engine, are its email, navigational maps, content delivery and user-friendly interfaces.

But they would not be able to survive in this cutthroat market, in which IT services and gadgets come and go in a split second, without help from partners, industry sources said.

In order to become a platform, Daum Kakao will have to create an ecosystem, or value for customers. It will need more than just Tencent, a China-based Internet giant and one of Daum Kakao’s main shareholders, as a partner to find new opportunities and breakthroughs at home and abroad.

“Only high participation from partners or third-party developers can help Daum Kakao create the kind of ecosystem it needs for sustainability,” said an industry source, noting that Apple’s iOS-based App Store and Google’s Android-based Google Play became disruptive platforms thanks to their partners.

The new company needs to pass through this stage even before considering taking on Korea’s portal giant Naver, whose market cap is more than twice that of Daum Kakao.

This could not be more important for Daum Kakao amid the emergence of secure alternative mobile services platforms such as Telegram messenger and Google search.

By Park Hyong-ki (hkp@heraldcorp.com)