SK Telecom: New Strategic Formation and Convergence Business Models

LTE and Mobile WiMAX, Telematics, e-Paper, Mobile Commerce, and Convergence Strategy Analysis and Implications

Publication Date	October 2009
Publisher	Yonku & Kenkyu
Product Type	Report
Pages	30
ISBN Number	not applicable
Product Code	YKI00004

SK Telecom: New Strategic Formation and Convergence Business Models

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Summary

SK Telecom has plans to tap into new revenue streams by implementing the next growth strategy program, so called 5nGINE, and aims to secure IPR technologies and applications. This service-driven strategy guided by the logic that corporate strategy for the future should start with a clear understanding of values for consumers and differentiated factor in fast-evolving global mobile service markets is the core part of 5nGINE planned by SK Telecom. 5nGINE strategy entails following technology items

- 4G Initiatives
- Advanced User Interface: Voice Recognition and Processing in Mobile Phone and E-Paper Display
- Convergence: Mobile in Vehicle (Telematics), Mobile Commerce and Finance, Open Market Place
- Cloud Computing
- Smart Grid

Along with technology development strategy proposed by its 5nGINE, SK Telecom established Innovation Strategy, Management Action Plans, and Business Portfolio Strategy, in order to efficiently support the 5nGINE.

Meanwhile, SK Telecom's oversea direct investment as a mobile network operator is likely to be altered in that SK Telecom continuously has announced retrenched business plans in China, Vietnam, and Kazakhstan. SK Telecom sold all the China Unicom shares, froze the financial investment in its mobile service Joint Venture in Vietnam and decided not to go Kazakhstan mobile markets.

Yonku & Kenkyu believes that SK Telecom's new strategy focusing on convergence business and IPR acquiring is attributable to its disappointed oversea expansion strategy. Recent market-exit from oversea business is closely related with its new strategic formation - 5nGINE.

In this report, Yonku & Kenkyu examined multiple R&D items entailed in SK Telecom's 5nGINE strategy. Most part of items has unique business models and has been developed by the way of proprietary technology. Along with technology items, we focused on business models and strategic aspects that help mobile carriers review their current state.

4G for SK Telecom

Analysis of lack of commitment to LTE by Korean mobile carriers, Demand and CAPEX discussion, current state of 3G and WiBro in Korea, Possible scenario for LTE deployment

SK Telecom's new Telematics program

MIV (Mobile in Vehicle), which features user's operation via mobile Phone; Key Differentiated Factors, Functional Features, Business Plans in China

User Interface for IPRs

Voice Recognition and Processing on Mobile Phone / e-Paper Display; the Motivation of R&D investment, Business Models devised by SK Telecom

Convergence:

Mobile Commerce, Mobile+Finance, Mobile+Online Business, Open Market Places; Business Models and SK Telecom's strategy

Yonku & Kenkyu also analyzed the strategic implications associated with SK Telecom's 5nGINE strategy and recent oversea market-exit strategy: Why SK Telecom decided to pull out Vietnam and China, and instead, changed to service-driven and IPR holder strategy? This research also provides insight into current mobile solution in mobile commerce, convergence business models, consumer and enterprise acceptance to WiBro and data and applications in Korea.

What Questions Does this Report Answer?

-Why did SK Telecom unveil new strategic formation: from the investment in oversea business to service-driven and R&D for advanced applications?
-What are the reasons for SK Telecom's financial retrenchment in Vietnam and China?
-What are the situation and reasons for the lack of commitment to LTE for Korean mobile carriers?
-When will SK Telecom start LTE and 4G business?
-What are the solutions for enterprise in mobile WiMAX?
-What are key differentiated factors in SK Telecom's new Telematics service - Mobile in Vehicle?
-What is the state of Chinese Telematics markets?
-Why does SK Telecom pursue IPRs in e-Paper and voice recognition technologies?
-What are the business models in mobile commerce, mobile finance, and convergence business in SK Telecom?
-What are the strategic implications in SK Telecom's new vision?

Content

1 Executive Summary

2 SK Telecom’s New Strategy Overview

2.1 Technology Strategy - 5nGINE
- 2.1.1 Business Objectives by 5nGINE
- 2.1.2 Technology Items in 5nGINE
2.2 Innovation and Management Strategy
- 2.2.1 Innovation Center
- 2.2.2 Business Incubation Center
2.3 The Strategy for Business Portfolio
2.4 Changed Oversea Business Strategy: Market Exit from China and Vietnam?
- 2.4.1 Pullback from China: Sold all shares of China Unicom
- 2.4.2 No Further Investment in Vietnamese Mobile Service
- 2.4.3 Not Participating in the Final Bidding for Kazakhstan Business
2.5 Analysis: Why 5nGINE and Oversea Business Withdrawal?

3 Technologies planned by 5nGINE Strategy

3.1 4G - LTE or WiMAX?
- 3.1.1 Lack of Commitment to 4G by SK Telecom
- 3.1.2 Analysis: Market Situation for Lack of Commitment to 4G in Korea
  - 3.1.2.1 CAPEX Discussion
  - 3.1.2.2 Demand Discussion
- 3.1.3 4G Service Timeline and Scenario to SK Telecom
- 3.1.4 State of Mobile WiMAX in Korea
  - 3.1.4.1 3G + WiBro Integrated Service
  - 3.1.4.2 Enterprise Services over WiBro
3.2 MIV ? Mobile in Vehicle: Telematics Business
- 3.2.1 MIV Offerings and Service Concept
- 3.2.2 Analysis: Values and Key Differentiation?
- 3.2.3 Business Models in China
- 3.2.4 Market State: Telematics Service in China
3.3 Electronic Paper for Mobile Handset Interface
- 3.3.1 Competition in Global E-Paper Markets
- 3.3.2 Performance of E-Paper developed by SK Telecom
- 3.3.3 Analysis: SK Telecom’s Business Models in E-paper
3.4 Voice Recognition and Processing
- 3.4.1 Application Scope in Mobile Service
- 3.4.2 The Motivation of R&D Activities
3.5 Convergence Business
- 3.5.1 Convergence = Across Industry and Incorporating Applications
- 3.5.2 Mobile + Finance Convergence
  - 3.5.2.1 Mobile-Finance Business Models
- 3.5.3 Mobile + Commerce Convergence
  - 3.5.3.1 M-Commerce Business Models
- 3.5.4 Mobile + Online Convergence
- 3.5.5 Open Market Place - T Store by SK Telecom
- 3.5.6 Other Convergence Business Models

4 Strategic Implications from SK Telecom’s New Strategy

4.1 Reasons for Withdrawal of Oversea Business?
4.2 The Rationale for Service-driven Approach
4.3 Strengthening Convergence Business

5. Appendix - Acronyms

List of Figures

Figure 1 Network Deployment and Mobile Service Applications by SK Telecom 2000-2008
Figure 2 MIV (Mobile in Vehicle) by SK Telecom
Figure 3 e-Paper developed by SK Telecom
Figure 4 Convergence Business Models by SK Telecom
Figure 5 USIM based Business Models
Figure 6 Mobile Commerce on Mobile Phone by SK Telecom
Figure 7 Mobile Voucher Business Model
Figure 8 Open Market Place ? T Store Business Models

LIst of Charts

Chart 1 Mobile Subscribers vs. 3G,HSDPA,HSUPA Penetration Rate and Subscribers in Korea 2007-2009
Chart 2 Data Revenue and Data Revenue Share in Korea, 2005-2008
Chart 3 Download Share by Applications in Korea
Chart 4 Strategy Change: from Regional Oversea Mobile Service to Service-driven Approach
Chart 5 Strategic Formation by SK Telecom

List of Tables

Table 1 Deployment Outlook in Korea: LTE / Mobile WiMAX / LAN 2008-2016
Table 2 CAPEX, Subscribers, Revenues in Mobile WiMAX: Korea Telecom and SK Telecom
Table 3 Open Market Place Registration Fees and Allowed Number of Applications by SK Telecom

Video Simulation

Video 1: Functional Features and Detailed Simulation of MIV(Mobile in Vehicle)