20091129

iPhone rocks Seoul and sacred cows

KTF will probably sell between 300,000 and 500,000 iPhones in Korea, and Apple make a big splash for Christmas.

The buzz has been building up for many years, people have been massively preordering iPhones (over 60,000 units, to be compared to an estimated 400,000 base of smartphone users in Korea), and well ahead of the official release (yesterday), massively purchasing iPhone accessories.

As we mentioned before (see "
iPhone wakes up Korean mobile internet market"), Apple will probably be associated with a boom in usages which should have happened much earlier : it's less a matter of design and hardware (Samsung and LG handsets have caught up in user experience), than a litany of missed opportunities, protectionist regulations, and terrible marketing (dissuasive pricing for data, app stores launched much too late...).

If Korean operators and manufacturers have no one to blame but themselves, at least KT / KTF will enjoy the exclusivity for awhile. And the context is perfect : hipsters don't have much choice for Xmas, all high tech fields considered. There are fantastic TVs out there, and the World Cup is coming soon, but that's a completely different range of prices.

Speaking of which... a "basic" iPhone 3GS 8 giga costs KRW 132,000 (about USD 112.6) for a 2 year subscription at the "basic" rate of KRW 45,000 (about USD 38.4 - the kind of basis many MNOs would love to boast). The 32 giga reaches KRW 365,000 (about USD 311), but the price goes down to KRW 264,000 for subs with a KRW 65k plan, and to zero for premium customers (KRW 95k / mo).

That's much more aggressive than what competitors expected, but Apple and KT obviously learnt a lesson from China, where the device struggles. Apple didn't want to fail in the homeland of two major rivals, and decided to forget about short term rentability.

What does it leave for rivals, beyond negative campaigning ? Differentiation by technology ? There's no DMB on iPhones, and that's the key techno for mobile TV in Korea... for the moment. And SKT customers pay for DMB TV, not KT customers...

You get it : the only way is to join the price war. In other countries, rival operators could counter the iPhone with a wider range of terminals but here, LG and Samsung control 90% of the market. Samsung and SKT united to discount iPhone rival Samsung Omnia2 to the max, dividing the price by two or three, and giving it away for subs who pay KRW 95,000 per month. The beauty used to sell for KRW 900,000, and incredibly enough, price cuts only started a few weeks ago, and by not even 15% ! So instead of acting as leaders and making the most of their window of opportunity, they wasted it milking the stupid cow.

By the end of the year, that will change. And the local smartphone market shall look a bit smarter.

mot-bile 2009



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