re: Herschel Does the World Cup
Upon arrival in Korea we were lent a LG KH5000 color display camera phone to use during our time in Korea. This phone was designed to operate on the KT Freetel CDMA2000 1X EV-DO network.
>> Travels To Asia – A Skeptic’s Addiction To New Services
Shosteck Email Briefing
Issue #57 July, 2002
In early June, a group of analysts and press from around the globe visited Asia -- Korea and Hong Kong – to get a first-hand view of next generation technologies, devices and services, and how wireless subscribers are actually using them.
The purpose of this commentary is not to endorse any one technology, device, or manufacturer but rather to discuss the merits and the impact that new services and devices are having/will continue to have on lifestyle, and, in turn, device sales and ARPUs.
Upon arrival in Korea we were lent a LG KH5000 color display camera phone to use during our time in Korea. This phone was designed to operate on the KT Freetel CDMA2000 1X EV-DO network. Samsung has also manufactured camera phones for the 1X EV-DO Korean networks. Other manufacturers have made color display phones for the Korean market (CDMA 1X networks).
Manufacturers such as Sharp, Casio, Mitsubishi, NEC, and Toshiba have also made camera phones with color displays, for the Japanese-based PDC, FOMA, and CDMA2000 operators. Ericsson’s T-68i supports GSM operators. Nokia’s 7650 will be hitting the GSM world shortly. Other manufacturers are planning similar products.
The impact of these color phones will be significant. Statistics from Korean and Japanese operators support this. Mr. Tong Wang, President, Beijing Samsung Telecom Research and Development Institute, said in a presentation at the 3G World Congress in Hong Kong on June 12, 2002, that both data ARPU and total ARPU have increased in the Korean market as a result of launching color display phones.
In the 18 months between September, 2000 and March, 2002, total ARPU increased from $36.20 to $41.80 or by 15%. Data ARPU increased from $1.30 to $2.20 or by 69%.
The effect is even more clear when comparing data revenue of monochrome and color phone users. As of March, 2002, data ARPU among users of cdmaOne monochrome terminals in the Korean market was $1.60. Data ARPU among users of CDMA 1X color terminals was $6.29, or 3.9 times greater.
These statistics support our hands-on observation that color displays increase the value of the end-user experience, resulting in a rise in network operator ARPU – provided the network operator prices the services attractively. As cameras become prevalent, we anticipate that ARPU will continue to climb, since such phones enable image sharing (or "picture messaging").
As part of our trip, we attended a few World Cup matches in Korea. With the color camera phones in hand, analysts and media were sending pictures from the football matches to friends, colleagues and family directly from the phone. The appeal of end-users being able to generate content themselves was immediately felt. Sending pictures meets key requirements for successful new services, such as immediacy and instant gratification. Most importantly, it is addictive.
The network was not without bugs. CDMA 1X EV-DO is the next phase of evolution of CDMA2000 and provides a data only network in parallel to the CDMA 1X network. KT Freetel’s 1X EV-DO network was launched only in early May, 2002, in Seoul and nine other cities -- the venues for the World Cup. (The SK Telecom 1X EV-DO network was launched in January, 2002.)
In some cases, it did take several tries to send a picture. But given the crowded stadium, the new network (and technology) and other people communicating with their friends as they watched the matches on large television screens placed on the streets, the ability to successfully send pictures was remarkable. And in the majority of instances, the pictures arrived at their destination.
Korea is not alone in offering image sharing. Japan’s J-Phone’s PDC-based Sha-Mail service provides another strong example of the appeal of an image sharing service. As of March, 2002, there were more than four million users – one third of J-Phone’s subscriber base.
For network operators, these new services mean increased ARPU, as we are already seeing with KT Freetel and SK Telecom in Korea, NTT DoCoMo’s i-mode, KDDI and J-Phone’s Sha Mail in Japan. The key is pricing these services sensibly, with a selection of devices at the right price point.
Network operator ARPU isn’t rising because these Asian operators are selling technology. End-users don’t buy technology. Rather, these operators are selling interesting services and pricing them attractively. They are also offering customers a good selection of handsets.
For device manufacturers, these new services mean more sales as end-users upgrade their phones to ones with color displays, better sound, better power, better memory. The full value will be realized when people can send to and receive from others with camera phones (phones with built-in or add-on cameras). For now, prices of devices are still too high for the mass market, but prices will decline over time.
And for end-users, these new services and devices mean more fun, more productivity, and a new way to communicate. <<
- Eric - |
