Mobile evolution:
    Latest trends of Korean mobile market and its movement




    Changan CHOI
    Market Adviser, IN S...
Table of Contents

                                             II. Introduction: success or delemma?

                   ...
I. Introduction: success or delemma?                                                                     Korean Mobile Mar...
I. Introduction: success or delemma?                                                                Korean Mobile Market

...
II. Mobile phones – more than PC                                                                                     Korea...
III. Maturity of mobile network – next runner, 3G network                                                                 ...
III. Maturity of mobile network – next runner, 3G network                                                Korean Mobile Mar...
III. Maturity of mobile network – next runner, 3G network                                             Korean Mobile Market...
IV. Mobile meida – new trials, failures and successes                                                    Korean Mobile Mar...
IV. Mobile meida – new trials, failures and successes                                                       Korean Mobile ...
IV. Mobile meida – new trials, failures and successes                                                              Korean ...
IV. Mobile meida – new trials, failures and successes                           Korean Mobile Market




                 ...
IV. Mobile meida – new trials, failures and successes                                                Korean Mobile Market
...
IV. Mobile meida – new trials, failures and successes                                                              Korean ...
IV. Mobile meida – new trials, failures and successes                                                                     ...
IV. Mobile meida – new trials, failures and successes                                                       Korean Mobile ...
V. Mobile payment – crossing the chasm                                                                           Korean Mo...
V. Mobile payment – crossing the chasm                                                                                    ...
V. Mobile payment – crossing the chasm                                                                      Korean Mobile ...
V. Mobile payment – crossing the chasm                                                                             Korean ...
V. Mobile payment – crossing the chasm                                                                                    ...
V. Mobile payment – crossing the chasm                                                                                    ...
V. Mobile payment – crossing the chasm                                                                            Korean M...
V. Mobile payment – crossing the chasm                                                                                  Ko...
V. Mobile payment – crossing the chasm                                                                 Korean Mobile Marke...
V. Mobile payment – crossing the chasm                                                            Korean Mobile Market



...
VI. Business use of mobile Internet                                                                        Korean Mobile M...
VI. Business use of mobile Internet                                                                                   Kore...
VI. Business use of mobile Internet                                                                                  Korea...
VI. Industry structure and new challenges – mobile evolution                                                            Ko...
VI. Industry structure and new challenges – mobile evolution                                                 Korean Mobile...
VI. Industry structure and new challenges – mobile evolution                                                Korean Mobile ...
VI. Industry structure and new challenges – mobile evolution                                     Korean Mobile Market

In ...
VI. Industry structure and new challenges – mobile evolution                                                          Kore...
VI. Industry structure and new challenges – mobile evolution                                                    Korean Mob...
VI. Industry structure and new challenges – mobile evolution                                                            Ko...
VI. Industry structure and new challenges – mobile evolution                                    Korean Mobile Market



Ko...
VII. Behind the successes of Korean ICT industry                                 Korean Mobile Market




         To be u...
Thank you!!

     For more information, please, refer to the the following contact information

     Changan Choi (Mr.)
  ...
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Mobile evolution: Latest trends of Korean mobile market and its movement

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Changan CHOI
Market Adviser, IN Seoul office INBDP Market Report related to wireless future and Mobile Monday Norway

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Mobile evolution: Latest trends of Korean mobile market and its movement

  1. 1. Mobile evolution: Latest trends of Korean mobile market and its movement Changan CHOI Market Adviser, IN Seoul office INBDP Market Report related to wireless future and Mobile Monday Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  2. 2. Table of Contents II. Introduction: success or delemma? II. Mobile phones: more than PC III. Maturity of mobile network: next runner, 3G network IV. Mobile media: new trials, failures and successes V. Mobile payment: crossing the chasm VI. Business use of mobile Internet VI. Industry structure and new challenges: mobile evolution 1/56 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  3. 3. I. Introduction: success or delemma? Korean Mobile Market Korea has done a great job for the last decade! The highly unbalanced development, however, weighted onto certain areas is now pulling its back from going ahead for further/continuous growth in the future Success? ICT industry ma?? r/and dilem o Too much dependent on USD 287.7 bil (p) in 2007 Hardware 35% out of total export Network infra. services 40% contribution to GDP growth Technology-driven - 16% of total GDP Network infra. No. 1 ICT product lines Mobile DRAM – 45.1% HSDPA, Wibro, DMB Balanced onto Mobile phone – 24.7% 90% mobile users LCD – 46.5% Software Internet broadband: PDP – 54% Application services 91% in 2006 <- 70% in 2002 Flash Mem – 41.1% (Norway: 61% <- 10%) Practical/society use … World’s highest avg. speed 1/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  4. 4. I. Introduction: success or delemma? Korean Mobile Market As Korean mobile market players are making new trials balanced onto services and applications, they are to face, are facing or faced challenges of bridging users from their innovative uses to practical ones in daily lives Chasm theory Geoffrey A. Moore 1991 Coverage of this report Customer value Mobile solutions in Korea innovative Practical Mobile Phone Mobile Media Revenue drop! Mobile Payment Source: Crossing the chasm, Geoffrey A. Moore 1991 2/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  5. 5. II. Mobile phones – more than PC Korean Mobile Market Mobile users are very active in using multimedia phones such as camera and music, and a recent survey says that they are moving toward more use of smart phone styles overtime, which has been very small in Korea Functional popularity of mobile phone Anticipated killer applications in 2009 Strategic targets Premium for the coming years!! Smart phone Camera function Open OS about 5% (2008) 90% (2007) Touch Screen Ultra low cost Source: Allux, 2008 Priority in preference for touch phone purchase Cf.: most of touch phone is Win CE based smartphone Voice conference Multimedia High resolution camera: 19.8% function 30% (2008) &music function MP3/VOD multimedia: 17.4% 70% (2007) Internal/embedded memory size: 11.7 Mobile TV/DMB: 11.2% Multi-tasking: 9.2% Video conf. Call: 7.7% Source: Naver KM, etnews, i-news, 2007, 2008 Source: Survey by ARG, 2008 3/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  6. 6. III. Maturity of mobile network – next runner, 3G network Korean Mobile Market After its launch in early 2007, WCDMA based 3G service has been growing very rapidly mostly thanks to big subsidies both from government and telecom players – currently 1/3 of total mobile users Total number of mobile subscribers Unit: thousand Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Year Subscribers 38916.8 39382.5 39703.2 40197.1 41101.2 42319.8 42801.2 43497.5 44266.0 44982.8 ! d! e at CDMA vs. WCDMA Penetration rate d (as of June 2008) up be Mobile users: 89.2% To Now, 50000 14000 17,000 Mobile users: 44,982,823 (Jan.) 12000 40000 45,274,511(Sep.) 10000 30000 CDMA 8000 6000 20000 Commence 4000 in Feb, 2007 10000 WCDMA 2000 0 0 Feb Mar July June 1 June, 2008 Total population: 50,429,173 (exp) 2007 2008 2009 주석 3/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  7. 7. III. Maturity of mobile network – next runner, 3G network Korean Mobile Market From major stream of CDMA network until 2006, Korea has launched high speed mobile network services including HSDPA, Wibro(Mobile WiMAX), CDMA 2000 Rev.A. And, it is said that no. of 3G subscribers will pass the no. of 2G subscribers within this year, 2009 Major Players in Korea Make-up of mobile network (2008.6) (2009.1) launched in 2006 HSDPA LGT (WCDMA) 18% About 36% KTF launched 31% in 2006 CDMA Rev.A CDMA(2000), about 1.4% PCS SKT 51% about 62% launched in 2006 Wibro* about 0.6% * Source: Wibro = Mobile WiMAX Source: SKT, KTF, LGT and KCC combined, 2009 4/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  8. 8. III. Maturity of mobile network – next runner, 3G network Korean Mobile Market With Wibro covering the Seoul metropolitan area, HSDPA covers most of residential area in S. Korea. Recently, market leaders are seriously considering the combined service with these two, taking advantages from both of them Wibro(mobile WiMAX) major coverage HSDPA national-wide full coverage Residential area for 45% of total population Plus major universities and hot zones in other provinces No. of Players Main coverage Subscribers KT 190,000 National capital area SKT 3,400 55 hot zone in 44 cities Source: KCC, 2008 Source: KAIT, 2007 5/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  9. 9. IV. Mobile meida – new trials, failures and successes Korean Mobile Market Mobile media in Korea can be broken down into three major categories such as online, offiline and broadcasting, followed by 6 sub categories as following below Intr.: unrestricted Internet access Web browsing just like Web browsing at PC Online Case: OZ by LGT (CDMA Rev.A) SKT FB, limited (HSDPA) WAP* browsing Prospect: market leaders are facing an obligation to open its service and network based on open Mobile Media architecture, which gets popular overtime Intr.: restricted Internet access Client SW through WAP* gateway Offline Case: closed telecom portals SMS providing ringing tones, music, VOD, gmes, information, etc. - Nate (SKT), Magic-N (KTF) DMB/DAB Ez-i (LGE) Broadcasting Prospect: as being forced to open 3G (WCDMA, Wibro) wireless network and in response to strong demand for WB, WAB browsing will apapt open access more and more * WAP: Wireless Application Protocol 6/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  10. 10. IV. Mobile meida – new trials, failures and successes Korean Mobile Market Mobile media in Korea can be broken down into three major categories such as online, offiline and broadcasting, followed by 6 sub categories as following below Intr.: on-deman contents update Web browsing through the downloaded client Online application SW Prospect: this type of services are developed with M2M services using USIM chip Case: WAP browsing 1. Frontpage and WAP page link - mobile video, Magazine, newspaper, public trans. info, membership service, Mobile Media financial service (stock, banking, credit card, etc.), ticket reservation, online game, public service reservation 2. Stand-alone: mobile game, anti-mosquito, etc. Client SW (VM) Intr.: Short message service Offline SMS Case: 1. notification: confirmation on payment, ticket, reservation, etc. simple AD, alerm, gifts, etc. DMB/DAB 2. fishing to WAP page: gifts, AD Broadcasting 3. SMS/MMS-ticket: text or barcode 3G (WCDMA, Wibro) Prospect: SMS is well awared by users and will be developed together with M2M services 7/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  11. 11. IV. Mobile meida – new trials, failures and successes Korean Mobile Market Client SW (VM) Stand-alone Partial online Online Server Server Server Updates Download Download Download, once for all once for all connected to the Net Live skin Ring tone, music Bus, Subway Mobile game Credit Telecom Banking Server Taxi, Cultural centers, Card Convenient store, E-Mail, chatting SW Internet cafe, Download Vending machine, Stock, lottery, Top-up/refill USIM Public parking lot, Online malls, etc. banking, T-money Location based services News Server Server Detail request/ Additional chrge VOD, Magazine, News SW Download Reading Mobile shopping Daily update/ USIM early morning 8/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  12. 12. IV. Mobile meida – new trials, failures and successes Korean Mobile Market As of Feb, 2009 8.1 million 7.0 million 8.5 million Accumurated Accumurated Accumurated download download download Hit games: 6~7 month -> 3~4 month, Million downloads 9/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  13. 13. IV. Mobile meida – new trials, failures and successes Korean Mobile Market ? el? od m it of r Daily update: P Auto/manual 10/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  14. 14. IV. Mobile meida – new trials, failures and successes Korean Mobile Market SMS Notification: Spam/virus/crime -> regulation -> new business model? confirmation on your payment, ticket, SW Server reservation, Simple AD, alerm, gifts, etc. download server request SMS/ request or fishing Fishing to WAP page: WAP access page Gift – ring tone, music, bg. screen, ect. AD – mobile game, VOD & photos, PR event, etc. MMS Web Reservation/ Server page payment SMS/MMS ticket, coupon: App. SW MMS/ Info. Barcode Text type Screen User or WAP Pass/ Barcode type Reservation/ page reader payment RF USIM 11/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  15. 15. IV. Mobile meida – new trials, failures and successes Korean Mobile Market MMS event MMS coupon SMS event Musical message or logo song Ring tone/ Biz ring.. 2 1 call 3 You can listen to the logo song or any sort of musikal message when you make a call or receive a call 12/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  16. 16. IV. Mobile meida – new trials, failures and successes Korean Mobile Market Mobile media in Korea can be broken down into three major categories such as online, offiline and broadcasting, followed by 6 sub categories as following below Web browsing Intr.: mobile TV using DMB/DAB Online technology Case: Terrestrial DMB, Satellite DMB TPEG* service WAP browsing Prospect: as 30% (15 mil.) of total population is using Mobile Media DMB, it is expected to grow together with other commercial services, such as TPGE, interactive services through BIFS** technology and 3G network Client SW Intr.: realtime or on-demand mobile TV Offline service using 3G network such as SMS HSDPA and Wibro Case: Nate(SKT), June (SKT), Fimm(KTF), ez-i DMB/DAB miTV(LGT) - realtime terrestrial broadcasting, Cable TV, Mobile TV, Home shopping, event/spotlighted program, etc. Broadcasting Prospect: as telecom players would get involved in the 3G (WCDMA, Wibro) contents delivery and make more data traffic, flat fee or discount fee based pricing models are coming out and * TPEG: Transport Protocol Experts Group will compete with DMB service in a way ** BIFS: BInary Format for Scenes 13/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  17. 17. V. Mobile payment – crossing the chasm Korean Mobile Market Mobile payment market is becoming a battle ground for different market players such as financial bodies like bank, credit card companies, transportation card company, telecom players and payment portal providers Relational map between mobile payment market players Users Financial bodies Telecom T-money Payment portal /transportation Service providers card New technologies; Smartcard, contactless(RF), Bluetooth, etc. 14/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  18. 18. V. Mobile payment – crossing the chasm Korean Mobile Market Despite its small size yet, mobile payment market is growing very fast, and more than half of mobile users are registered or using mobile payments in their daily lives Mobile payment market growth % of mobile payment users Unit: thousand (%) Unit: KRW* bill. 22,250 (51.9) 1400 (Est.) Mobile Payment 1200 CAGR**: 29.3% 40% Users 1000 800 600 20,651 (48.1) 400 For statistical reason, this will be covered by two different categories: 200 Mobile banking users 0 2002 2003 2004 2005 2006 2007 Handset payment users Source: Mobilance, K-research, NIA(2007) *Average foreign exchange rate : 1,035/USD 193.9/NOK (2008), 929/USD 158.8/NOK (2007), 955/USD 149.1/NOK (2006) **CAGR: Compound Annual Growth Rate 15/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  19. 19. V. Mobile payment – crossing the chasm Korean Mobile Market As taking 13.6% of the total Internet subscribers, mobile banking subscribers made 138.1 billion transactions during the 2nd Q of 2008, and it is continuously growing Mobile banking Unit: thousand (%) Mobile banking Internet banking during 2nd Q of 2008 - 21,990 thousand transactions (3.8% up) - KRW 22,011.7 billion transaction (2.1% up) -> 1.6 transaction with KRW 1.6 million per person 6,620 (13.6) Mobile Mobile banking during 2nd Q of 2008 subscribers - 978 thousand transactions (9.5% up) - KRW 138.1 billion transaction (16.3% up) Internet banking Subscribed, but sleeping -> 0.14 transaction with KRW 20,846 per person 35,105 (69.6) Transaction by number of cases 13,615 (27.0) - ATM (42.9%) > Internet (24.4%) > Tele (12.6%) Inquiry and information access 1,709 (3.4) - Internet (57.9%) > Tele (12.2%) > ATM (10.6%) Actual users Source: BOK, NIA, 2007.6 cf.) Total population: 50,429 thousand, 2008.6 16/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  20. 20. V. Mobile payment – crossing the chasm Korean Mobile Market Around 60% of survyed people have experienced different types of handset payments, and small amount payment was the most popular type among the payments Handset payment experience and intended ceilings Frequency for use Handset payment experience Once Once for 3 months Havn’t used it yet, for 2 months Less than once 10% but 30% of them has intention to use 8% for 3 months 38% 40.9% 44% More than once per month 47.5% intended ceilings Subsitute for 8.0% Small amount of 3.6% Less than USD 5~10 credit card payment online USD 5 More than USD 100 Don’t care 6% 6% 12% 23% Public transportation USD 50~100 13% 23% 17% N=4272 Source: survery by K-research, etnews, 2008.6 USD 10~20 USD 20~50 17/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  21. 21. V. Mobile payment – crossing the chasm Korean Mobile Market In the online contents market, a survey said that handset payment was answered to be the most popular among others, where users had purchased mostly entertainment contents like music, movie, TV, games, etc. Preferences for online contents payment; Payment usage for online contents; less than USD 150~200 regardless of mobile payment, but it could imply future of handset payments Music 70 Dual check answers 60 Movie, TV 50 40 News 30 Game 20 10 Community 0 Others e-money(8.7%) Education Gift certificate(9.7%) Stock info. Membership point(15.6%) Banking(17.0%) Others Dual check answers ARS(33.5%) 0 10 20 30 40 50 60 70 80 90 Credit card(40.5%) Source : NIA, KISDI, 2007.10 Source : NIA, KISDI, 2007.10 Handset payment(65.3%) 18/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  22. 22. V. Mobile payment – crossing the chasm Korean Mobile Market Evolution and integration of all the Half success with limited number of Online contents payments are still previous services into USIM chip under phones, financial bodies and franchise used, being very popular WCDMA network Timeline 2002~ Timeline Early 2000~ Timeline 2006~ Creditcard, banking, Online game and transportation, Credit/checkcard, banking, Usage Usage community contents membership, online Usage transportation, membership, contents online contents, stock, etc. SMS, Web, CDMA Tech. network Smartcard, Bluetooth, Smartcard, RF, Bluetooth Tech. Tech. RF (integration all into USIM) Reliance Telecom > PG Reliance Telecom > financial Reliance Telecom =(?) financial Security Low (USD 5~10 ceiling) Security High Security High Timeline 2001~( 2002), now Open architecture for USIM Timeline 2003~ Bank account inquiry, to telecoms, pie share Usage Issue between telecom and (limited transfer) Usage Banking, transportation financials, participation of CDMA network, virtual Tech. Smartcard, RF, VM franchises, standardization Tech. account, simple link bet. Reliance Telecom = bank > PG bank and telecom Stage 3 Security High Reliance Telecom > bank > PG Security Low Survivial technologies Stage 2 *PG: Payment Gateway solution provider Note: this is only for the cases of normal mobile phones, because PDA Stage 1 phone took advantaged of Internet payment services from early stages 19/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  23. 23. V. Mobile payment – crossing the chasm Korean Mobile Market T-Money Top-up/refill Public transportation Taxi USIM RF Public transportation: Public bus buying Bus, taxi, subway Subway Retailers convenient store, theater, both, bookstore, etc. Public facilities Local office, toll fee, parking, museum, vending machine, telephone, ect. Internet Game zone 20/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  24. 24. V. Mobile payment – crossing the chasm Korean Mobile Market mobile ticket/upgrade RF ?by USIM SMS ticket/train registration, inquiry, payment, postponement, cancel, ect. SMS ticket/movie 21/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  25. 25. V. Mobile payment – crossing the chasm Korean Mobile Market While there are many mobile payment trials by different market players outside of telecom territory, mobile telecom leaders are paying huge investments in and very keen on taking the lead of this emerging market Online payment Credit card Example: Membership Transportation card Ticket reservation Banking USIM based mobile payments ID pass Stock security 22/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  26. 26. V. Mobile payment – crossing the chasm Korean Mobile Market Example: Other trials – not popular yet Mobile Home/TV SMS Mobile Creditcard phone Shopping link Internet Number fill-in number Online ticket Pass E-Ticket or Payment or or Purchasing Issuing Barcode Vending machine Payment Toll gate, (mostly prepaid Parking fee, e-money) 23/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  27. 27. VI. Business use of mobile Internet Korean Mobile Market Business use of mobile Internet in Korea can be broken down into three categories such as applications to enterprise solutions, emails on the phone and SMS/MMS for business purpose as following below Business Use of Mobile Internet Users reading email SMS/MMS Applications to ERP or enterprise solutions on phones for business purpose Mostly, they redesign and develop their own applications for their specific purpose in this case Business use of mobile Internet is very limited if they do not have full support from telecom players Due to the limitation of adopting new applications, they use PDA phones to meet their technolgical requirements Except for PDA, telecom players under the support of mobile makers are controlling the installation of applications and its working on the phone Thus, business players are using existing applications for different purposes if it is not in the PDAs or the smart phones 24/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  28. 28. VI. Business use of mobile Internet Korean Mobile Market Business Use of Mobile Internet Users reading email SMS/MMS Applications to ERP or enterprise solutions on phones for business purpose Less than 5% of total mobile users (about 1 million in 2008) Cases - enterprise email for management people mostly Limited environments until the time - government officers & staffs for their administration - Mostly relying on PDAs or SmartPhones, prior to full browsing service Prospects: full browsing service will encourage users to use it - not open architecture; only possible by installing client SW and in-house or enterprise email solutions - limited access to public/portal email accounts - expensive; additional cost for subscription 25/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  29. 29. VI. Business use of mobile Internet Korean Mobile Market Business Use of Mobile Internet Users reading email SMS/MMS Applications to ERP or enterprise solutions on phones for business purpose Cases: Prospect: SMS is well awared by users and will be 1. notification: confirmation on payment, ticket, developed together with M2M services reservation, etc. simple AD, alerm, gifts, etc. 2. fishing to WAP page: gifts, AD Issue of spam/junk message 3. SMS-ticket: text or barcode - 0.7 spam per day (2007), 2~3 spam per day (2006) - 70% of loan/financial, 15% of adultary, 6% of game in order 26/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  30. 30. VI. Industry structure and new challenges – mobile evolution Korean Mobile Market In the mobile service market, mobile telecoms have had a higher level and a wider range of control powers over the related parties, but in the new environment of open architecture, its power will be weaken overtime Users/Customers DMB, WWW TPEG Open access Broadcasters Potals supply Carriers Contents providers Intervene Telecom /mobile telecom portal Bigger Supply Subsidiary 100% dependency nego. Phone Contents power Phone manufacturers Financial bodies manufacturers providers Intervene Mobile ADs Payment Gateway Parts suppliers Wireless Telecom territory Source: modified from ppt by LGT at IT conference, 2008 27/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  31. 31. VI. Industry structure and new challenges – mobile evolution Korean Mobile Market Players in the mobile market are being and are soon to be surrounded by new challenges and unfamilar business environments in the near future, where they have to compete and survive to success Integration between wired Government Intervention and wireless telecom markets New or combined Price cut applications SK Broadband SKT Open competition (Hanaro) Payment/M2M - Wipi* removal Data services - MVNO? Open Internet KTF KT - Global standard: New media Open architecture browser, OS, etc. (Quadruple play?) * Wipi: Wireless Internet platform LGT LG Dacom for interoperability LG Powercom New or newly applied technologies USIM, Smartcard, VM, RF, Bluetooth High speed network: HSDPA, Wibro(Mobile WiMAX) Mobile TV: DMB 28/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  32. 32. VI. Industry structure and new challenges – mobile evolution Korean Mobile Market As the mobile telecom market is shifting its weights onto higher speed of HSDPA network, Data ARPU is increasing its portion to the total ARPU with increased packet consumption KTF ARPU increase, 10~12, 2007 Unit: KRW 40000 36,481 35000 29,315 30000 Monthly use of data packets has 25000 increased after HSDPA service launch 20000 15000 7,610 10000 5,301 HSDPA user made a higher level of 5000 21% 18% 0 CDMA HSDPA ARPU including data one KTF monthly packet use per user, 2007 Unit: packet Increased data use made a good offset 4000 for total ARPU against/despite the price 3500 depreciation of data service 3000 2500 3,580 packet in October compared to 2000 2,405 packet in 2006.10 1500 1000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Source: KTF, Woori stock & security, 2007, 2008 29/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  33. 33. VI. Industry structure and new challenges – mobile evolution Korean Mobile Market In the middle of fierce price war, use of data and voice conf. call are considered to be feasibile solutions to telecom providers, and, recently, recovered data ARPU with increased packets is proving its potentialities History of mobile operator’s data ARPU 2001 2004 2006 2008.08 ARPU SKT 4.4% 18% 25% 22% KTF 5.6% 14% 17% 19% Voice ARPU 10%, LGT 7.1% 6% 7% (Oz 17%) Source: SKT, KTF, LGT, ARG, 2008 Data ARPU History of SKT data ARPU 40% SMS, Follwed by ? HSDPA music bell Voice Conference call download IMT-2000 35% 3G users 20% 3G users Price cutting period Source: SKT, ARG, 2008 30/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  34. 34. VI. Industry structure and new challenges – mobile evolution Korean Mobile Market In response to potential user demand, the lagging telecom player, LGT, has first launched a open access service to the Internet, and other market leaders are reacting according to the situation Status of mobile telecoms’ unlatching door of their sanctuary 3 WWW 1 100% Telecom Telecom Telecom/Mobile Telecom Contents dependent Open WAP Open WAP Network Portal Providers(CPs) User/Customer 2 Telecom Telecom Portals,WAP Open CPs Open WAP Open WAP Telecom territory /Pricing range 3 Stand-by screen, VM(client SW) service Source: modified from ppt by LGT at IT conference, 2008 31/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  35. 35. VI. Industry structure and new challenges – mobile evolution Korean Mobile Market As market players are struggling to survivie in the new converged environments, business environments are getting similar to those of Internet market 15 years ago, or even more complicated, where wired telecom sticking to closed network and its own services eventually was gone out of the market Customer costs Flat pricing Combined pricing Incentives/promotion Very similar to Affordable phones Open to collaboration what? Customer use with unfamiliar industries Innovative -> practical Strategic alliance payment, entertainment, media, search Internet market evolved from proprietary network Cooperation/Win-Win 15 years ago Standard Convergence 32/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  36. 36. VI. Industry structure and new challenges – mobile evolution Korean Mobile Market Though the mobile market has different restrictions and considtions from those of the Internet one, Korean players will be able to get crucial insights from this history at large History of closed network with low speed Drivers behind the explosion of subscribers Vs. open Internet with hight speed Subscribers Broadband Internet provision Open Internet, open architecture & popularization xDSL, Cable network Pricing policy change: meta-rate system to flat-rate sum system Telecom community(closed network) Network environment/space expansion: PSTN network (plus a few of ISDN) from closed telecom network to open Internet Abundant capital/investment inflow Time to the market; explosive generation of busines models, new services, technology trials, etc. Unit: thousand in the open competition ’96 ’97 ’98 ’99 ’00 ’01 ’02 Users 731 1,634 3,103 10,860 19,040 24,380 26,270 Source: evaluated and surveyed by KRNIC, 2005 Source: KRNIC, 2005 33/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  37. 37. VI. Industry structure and new challenges – mobile evolution Korean Mobile Market Korean mobile market is opening its market to outside overtime in order to make itself more competitive Wipi removal 10% mobile phonens from abroad More USIM-based phones MVNO approval soon … Business environment is tougher and getting similar to that of Europe market including Norway, which means that it is familiar to Norwegian/European companies 34/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  38. 38. VII. Behind the successes of Korean ICT industry Korean Mobile Market To be updated, with two to three points 35/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
  39. 39. Thank you!! For more information, please, refer to the the following contact information Changan Choi (Mr.) Market Adviser, IN Seoul office Office: +82 767 2653, Mobile: +82 10 4847 0237 E-Mail: changan.choi@innovationnorway.no Reidar Grevskott, Commercial Counsellor, IN Seoul office Mobile: +82 10 3743 5992, E-Mail: reidar.grevskott@innovationnorway.no 36/36 Seoul Office, Copyright © 2006 Innovation Norway. All rights reserved.
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