3G means profit hemorrhage

Mobile | 2008/07/29 15:02 | Web 2.0 Asia

If you are in the US, often the TV ads you most frequently see are those for new cars. Well if you are in Korea, you are almost drowned by the mobile carriers' 3G TV ads. Some are humorous, some dead serious, but all those ads try to send out the single message: Become a member of our 3G service. Like this TV commercial on KTF's 3G service, which is about giving old folks shiny new 3G phones as a gift. (Now they are targeting the old folks? Come on, apparently they are trying to squeeze the last drop out of the market...)

Worse, "marketing budget" for mobile carriers doesn't only mean TV commercial costs. In fact, TV commercials only take up a minor share of their marketing budget. There's subsidies, MNP (mobile number portability) benefits, commissions to be paid out to shops, etc.

As a result, Korean mobile carriers saw profit slide in Q2: SKT spent roughly US$ 880mm in Q2, while KTF spent around US$ 620mm. To put these numbers in perspective, KTF's marketing expenditure was 40% of their whole revenue (not of profit). Both companies saw their stock price go down after the profit announcements.

But as all major carriers spent big money on marketing, the market share among the three carriers turned out to have stayed largely the same. So why bother with marketing? one might ask. Of course if you are from advertising industry, you'd not ask that question, but would hope the carriers will forever stay on their marketing binge.

TAG KTF, marketing, Mobile, SKT

Daum to share revenue with news content providers

Other | 2008/07/29 15:02 | Web 2.0 Asia

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Daum CEO (source: Yeonhap News)

Daum, Korea's top tier portal that has the nation's most highly trafficked news site, announced it will share ad revenue from its news site with the original news content providers, namely newspaper companies.

In Korea, leading newspaper companies have provided full content to the so-called portals, such as Naver or Daum, which are the de facto destination site for many Korean netizens. As a result, Korean online users didn't have to browse through different newspaper sites - they could just visit their portal of choice and consume all the news from different media in a "one-stop shopping" manner.

The problem was, as the news from various media got represented in a uniform way following the portals' look and feel, users perceived the news was actually coming from the portals and paid less attention to where that news came from. This led to less traffic to the original newspaper sites.

By contrast, Yahoo News mostly aggregate news from AP, AFP, Reuter - the so-called "news agencies" whose business model itself is news content syndication; Google News displays only the links to the original sites, and by clicking those links, users go to the original news sources.

As such, there have been great tensions between the original news content providers and the portals - And it looks like Daum is taking one step back now.

Under the new announcement, Daum will share ad revenue from its news pages with the original news content providers; And perhaps more importantly, will also provide an "outlink" option, where only the links to the original news (and maybe partial content) get displayed on Daum's news page, as opposed to the full content.

So how is news content consumed online in other Asian countries? Do users mostly visit (or subscribe to) each and every news site, or do users mostly check out aggregation sites, such as the portals? If the latter, how do original content providers and the channel owners (eg. portals) resolve the possible conflicts?
TAG Daum, News

A discouraging news for Korean open web movement

Web 2.0 | 2008/07/25 19:30 | Web 2.0 Asia
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Open Web, a Korean web forum led by professor Kichang Kim of Korea University is best known for its fight against rampant use of Active X in Korea, lost a lawsuit against the KFTC (Korea Financial Telecommunication and Clearings Comittee). Professor Kim accused that the Korean government's mandate on the use of Active X programs for the internet banking and other public web services should be lifted, as it is against fair trade and "overly favors technology from a single company (that is, Microsoft)".

Professor Kim has also asserted that as many Korean netizens somehow grew to think that Active X is something they have to download anyway, many of them are exposed to security vulnerabilities. Also, as so many entities including virtually all financial institutes in the nation depend on Microsoft technology in Korea, whenever Microsoft announces an update, the whole nation has to upgrade its internet infrastructure, and this leads to various losses on a national scale - Kim asserted.

But Professor Kim's year-long accusation fell short of convincing the court that the government mandate on the Active X is against fair trade and therefore is illegal. The logic there, Professor Kim claims, was that as the majority of Korean internet users are using the Internet Explorer anyway, not supporting the other browsers is not regarded to have severely deteriorated Korean users' online experience. But this is perhaps a case of "reverse causality" - i.e. Most Korean internet users are using the IE because of the Active X, in the first place.

With this court ruling, now the required use of Active X in Korea is not only a common practice, but also has just become a legal practice. Well, about this, I can only say - the jury's still out there.

Youtube Korea seeing a nice growth

Web 2.0 | 2008/07/24 18:29 | Web 2.0 Asia
ZDNet Korea reports that Youtube has seen a nice growth since its launch in Korea, making the service a third popular service among all video services in Korea.

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Youtube PV (source: Korean Click)

According to Korean Click, a Korean web analytics service, Youtube Korea is doing about 55mm monthly page views, while Pandora.tv (the leading player) is doing about 160mm. Youtube Korea's traffic grew by 66% in the first half of the year, making the service the highest growth entertainment web property in Korea.

The recent success of Youtube is largely attributed to localized content - Youtube Korea has partnered with Korea's local content companies such as cable TV networks. But some people also believe that at least part of the reason why Youtube is popular in Korea is because as a foreign service, Youtube is not directly under the government control.

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Image from Google

WIPI (Wireless Internet Platform for Interoperability) is Korea's standard mobile application platform that's currently required on all mobile phones sold in Korea. WIPI was driven by the Korean government, but the government is now thinking about scraping WIPI altogether.   

The original idea behind WIPI was to give interoperability to Korean mobile content providers, who had to re-develop their applications for different carriers that were each using different mobile application platforms. Before WIPI was introduced, SK Telecom was using its own VM (virtual machine), KTF was using Qualcomm's Brew, and LG Telecom used Java. As such, content providers - say a mobile game developer - had to re-develop their applications at least three times if they wanted to serve customers through all three carriers. Multiply this to the number of handsets they had to optimize their apps for, and you could imagine how much pain in the arse it had been for them.

Came for the rescue was WIPI. WIPI was a middleware that could theoretically run both Java (MIDP) and Brew applications on top of it. How wonderful - It was like developer's dreams come true. But in practice, there had been lots of small rough edges; Also, the WIPI requirement effectively kept certain phones from entering into the Korean market, most notably the iPhone. (Do you honestly believe Apple would even toy with the idea of getting WIPI onto their iPhone just for the smallish Korean market?)

WIPI was (and honestly, still is) a noble concept, and it did its part very well. Thanks to WIPI, Korean mobile content developers could save lots of energy and time. But it was still only a Korean standard (despite Korean government's hard efforts to globalize it), and in this open era any technology standard that's bound to a specific country doesn't sound terribly good. So it looks like we'll have to say goodbye to WIPI - and hopefully say hello to iPhone.

TAG iPhone, wipi

Should SK Telecom buy Sprint?

Mobile | 2008/07/17 00:35 | Web 2.0 Asia

CNBC reported Korea's #1 mobile carrier SK Telecom is in talks to acquire Sprint of the US. This is definitely not the first time SK Telecom was rumored to be interested in such a deal.

Should SK Telecom buy Sprint? I think so, given these:

1. SK Group has a fairly deep pocket and has a track record of hit acquisitions, so they will probably make this work right. Sprint is bigger than SK Telecom, but if we talk about the whole SK Group instead of SKT as a single company, it's a whole different story. This is relatively little known outside of Korea, but SK Group, Korea's #3 chaebol (after Samsung Group and LG Group), practically built itself through successful acquisitions. SK Telecom itself was an acquisition, and SKT has been quietly gobbling up content companies including Cyworld over the years. Of course there were some bad deals too (did someone just say Helio?), but you win some and you lose some, right? I believe there are more than enough # of smart guys at SK Group who will make sure a deal of this magnitude won't go sideways.

2. For SK Telecom, which is thriving in the Korean market but has been pretty much nonexistent outside the country, gaining an international presence is the name of the game. You can rule the Korean market as much as you want, but you're still limited to about 20-25 million subscribers range (Korean antitrust law demands SKT to keep its market share to about 50%). Sprint will give them a pretty nice presence in the ever-important US market, as well as a decent number of subscribers.

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Image from Google

3. Sprint will be a much better platform on which SK Telecom can roll out advanced handsets and services, than Helio was. Remember Helio users (albeit very few) were quite happy with their slick phones and their ARPU was a whopping $80. SK Telecom can introduce interesting mobile services running on slick phones (such as the Samsung Instinct). Of course it will be a huge challenge to stack up against the iPhone and its app store.

But even if SK Telecom indeed buys Sprint, one thing they should never ever do is to try to inject Korean blood (human resource, corporate culture, services not localized enough, etc) into the American body. That doesn't work, and I'm sure everyone at SKT knows it by now very well, through their largely failed attempt to bring Cyworld to the US.
TAG cyworld, helio, SK Telecom, SKT, Sprint, Virgin

More evidence that Koreans are hooked to the net

Other | 2008/07/15 18:10 | Web 2.0 Asia

According to a recent study, 9.2% of the whole Korean population (including 14% of all teens) are found to be the "internet addicts" who may need to seek some professional help.

Another survey done by Belkin Korea (the Korean branch of the computer accessories company) showed that the favorite spot at home where Koreans use their laptops and notebook computers is the bedroom. When asked where they use their notebook computers at home mostly, 40% of Koreans answered "in bedroom", compared to living room (31%) and study (24%). This explains a product like this. (It's a Belkin product, by the way).

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Hey, aren't you supposed to sleep in bedroom? Apparently, for some folks, that's not necessarily the case. (I had posted these pics before too).

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