SKT Prefers Android Handsets Over iPhone as Flagship 3G Devices
Jung Man-won, SK Telecom CEO
By Kim Yoo-chul
SK Telecom, South Korea's biggest mobile telephony carrier, plans to release a "smart" phone powered by the Google-backed Android operating system next year.
The company is currently talking with local phone giants Samsung Electronics and LG Electronics about developing handsets based on Android 2.0, the latest version of the open-source operating system, which it plans to release sometime during the first half of 2010.
SK Telecom's commitment to Android contrasts with its lukewarm stance toward Apple's iPhone, the planet’s hottest gadget at the moment, citing uncertainties over demand and profitability.
"The Android-powered handset could come out as early as February. We are in detailed talks with major handset vendors, including Samsung and LG," a SK Telecom official said, Tuesday.
It remains to be seen whether SK Telecom’s backing of Android-powered handsets means that the company is leaping off the iPhone bandwagon.
Some SK Telecom insiders told The Korea Times that the company's top decision-makers are seriously considering dropping the company's previous plans to release the iPhone.
Although KT, SK Telecom's bitter industry rival, is betting heavily on Apple's iconic handset, SK Telecom officials claim that Android-powered phones may prove to be better for data processing and securing a wider range of applications.
Apparently, SK Telecom is not crazy about the idea of sharing data revenue with Apple, as the American device maker does with all of its partner carriers around the world.
The company was also concerned about surrendering its tight control of the content value chain, as the carrier wouldn't get anything from software downloads on Apple's App Store online applications market.
A snubbing from SK Telecom would deal a serious blow to Apple's plans to make iPhone popular here, as the carrier controls more than 50 percent of Korean mobile users.
"We are maintaining a wait-and-see approach for the iPhone. But we don't intend to be aggressive and push for an early release," said another SK Telecom official.
Officials at Samsung and LG confirmed that they have plans to provide Android-powered handsets to SK Telecom. Both companies say it will be possible to provide the phones by the end of March as the latest.
"We are gauging the timing of the Google-powered phones. Shipment may start within the first half of next year," a Samsung Electronics official said.
KT and LG Telecom, which is the smallest of the country's three mobile carriers, also have plans to release Android-powered handsets.
The Android platform, developed by a massive cross-industry alliance led by Internet giant Google, is based on open source Linux software, enables greater flexibility for programmers building applications and has features tailored to handsets.
Major handset vendors such as Samsung promise that their Android-powered mobile devices will allow users a seamless transition in Web services from their desktop computers to mobile phones.
Electronics makers have been competing for supremacy in terms of smart phones, which feature Web browsing and multimedia features, as they offer higher margins compared to conventional handsets.
Apple has been leading the smart phone wars in recent years with the iPhone and the App Store, an online applications service.
This has electronic makers and wireless carriers desperately seeking ways to beat Apple at its own game, and they are ready to bet that Android could be the answer.
Currently, more than 32 mobile carriers in 265 countries are providing Android-based phones and the number is expected to grow, giving companies like Samsung a fighting chance against the iPhones and BlackBerries of the world.
Android's share of the market for handset operating systems will rise to 9 percent in 2013 from 2.4 percent in the second quarter of this year, according to forecasts by iSuppli, a research firm.
However, another research firm, Gartner, projects Android's share will hit 14.5 percent by 2012, moving into second place behind only the Nokia-led Symbian, surpassing Apple and Research In Motion’s (RIM) BlackBerry.
Android is open and free to all handset makers, while Apple and RIM keep a close hold on their operating systems.
Some say the success of Android-based handsets and services will depend on the number of partners the Android community is able to gather, and the open-source nature of the technology collaboration means that relationships will not always be in lock-step.
But analysts have no questions over whether the global smartphone market will become a "two-horse race" between the iPhone and Android phones, with Android winning.
"Unless Apple changes its business model, the Android will prevail," said Bae Joong-kang, chief manager at KTB Investment, said.
Good News for Phone Seekers
With the country's three mobile carriers planning to release Android-powered handsets, local consumers will see their smart phone options expand.
Samsung and LG have been competing for supremacy in smart phones here, while foreign makers such as RIM, Sony Ericsson and HTC make up a smaller share.
"The local smart phone market will gain an additional momentum for expansion as local carriers and handset vendors are strengthening their smart phone-related line-ups and services," Kim Sung-in, an analyst at Kium Securities, said.
SK Telecom has been selling Samsung's "T OMNIA II," a handset equipped with Microsoft's Windows 6.5 Mobile operating system, while LG Telecom will release two separate Windows Mobile-based smart phones by Samsung and LG this month, company officials said.
"China Unicom has guaranteed Apple to sell 3.5 million units of the iPhone. But the devices have so far sold less than 10,000 units after two weeks since the introduction," a SK Telecom source said.
"The talks with Apple may fall through if we can't narrow our differences. Personally, I am doubting the iPhone's success in Korea."