 Customers examine an iPhone 4 at an SK Telecom multimedia shop in downtown Seoul, Wednesday. The country’s top mobile carriers SK Telecom and KT are both carrying Apple’s popular handset in their smartphone lineup. / Courtesy of SK Telecom |
By Yoon Ja-young
The second round of smartphone wars broke out with SK Telecom including the iPhone in its lineup, but local handset manufacturers are unable to enter the fight. Unlike the first round where it was SK Telecom teamed up with Samsung Electronics versus KT wielding Apple’s iPhone, the second is between the carriers, with both KT and SK Telecom now brandishing the Apple phone. The special favors granted to the iPhone by telecommunication companies are weakening the position of local manufacturers in the market.
SK Telecom, the country’s largest mobile carrier, and KT, until recently the sole supplier of the iPhone here, following close behind are competing to strengthen after-sales services for iPhones, a sensitive area Apple has been neglecting.
They extended the replacement period for malfunctioning handsets from one day to seven and then to 14 from the day of purchase, lengthening the time period in ping-pong retaliation. The carriers are also offering a subsidy on after-sales service fees and insurance for the smartphone. Local manufacturers have been shouldering part of the subsidy that mobile carriers offer new subscribers, but Apple has never considered this for its globally successful phone. Neither SK Telecom nor KT seem bothered by Apple’s usually limited policy.
Neither of them wants to lose out as the money at stake has gradually grown in significance. The number of ordinary feature phone users whose two-year subscription ends this year nears 15 million. This is twice the number of new smartphone subscribers last year.
Carriers have power
The carriers’ attitude to court the iPhone has prompted the market to speculate that a shift in power is taking place from the carriers to the handset makers. It seems true of the iPhone but it yet has to be seen with other handsets.
Samsung Electronics sold over 2.8 million of its Galaxy S as SK Telecom concentrated all its marketing effort to promote it to compete with KT solely offering the iPhone. The Galaxy S is competitive but a considerable number of its users were persuaded by the power of the country’s top carrier, SK Telecom. They trusted the network quality, preferred its membership program, or simply liked its brand power. Samsung will be supplying the Galaxy S2 through KT as well, but the impact is likely to be less than the iPhone’s through SK Telecom as KT garnered 70 percent of its smartphone subscriptions through the Apple device. Many people chose KT for their smartphone subscription simply for the iPhone.
The situation is even more worrisome for LG Electronics trying to recover in the smartphone battle with its Optimus 2X, supplied through SK Telecom. “It is crucial for LG to maintain its competitiveness. Carriers are taking a dual or triple smartphones strategy, and LG has no presence” said Nam Tae-hyun, an analyst at IBK Investment & Securities.
SK Telecom’s T-map, a navigation service, was the reason for some people to choose the Galaxy S over the iPhone, but SK Telecom announced that it will soon offer a special version of T-map for the iPhone, as well as a mobile wallet service. Most of KT’s services are already customized for the iPhone. They are strengthening support to win in the iPhone game, but this is not good news for other manufacturers.
It doesn’t mean that local manufacturers have no chance. “This could be turned into an opportunity. The point here is to be in the mainstream,” said Nam. Analysts advise local manufacturers to change the rules, from carrier versus carrier to handset versus handset. “Carriers are continuing to set the market pattern, but handset makers are having more input than before. Apple could neglect after-sales services as its iPhones had power. All rivals have to do is to come up with better phones,” Nam added.
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