SKM to Launch T Store

South Korea's incumbent wireless operator, SK Telecom (SKM - Analyst Report), is set to launch T Store, the first mobile open market in Korea, on Sep 9. The upcoming on-line store will feature applications that are optimized for smartphones and other select regular handsets.

T Store will provide an open platform where content developers can sell their applications to users of mobile handsets based on the Wireless Internet Platform for Interoperability (WIPI), which allows cell phones to run applications regardless of manufacturer or carrier. Customers can download from a large assortment of multimedia content (approximately 6,500 applications), including games, phone decoration, music, broadcasting/movie and language/education that are categorized under eight main menus.

Registered content developers can sell their applications against a yearly registration fee, which is expected to be waived by the company by end of 2009 to boost developers' participation. The current revenue split is 70%/30% for the developers and SK Telecom, respectively. Since mobile users can download contents over the Internet, they do not have to pay expensive packet fees as in the case of downloading applications over the air.

Although T Store resembles Apple's (AAPL - Analyst Report) App Store, it differs from certain aspects such as operating system compatibility and handset accessibility. Unlike App Store, T Store supports four mobile operating systems: Windows Mobile, Symbian, Android and Linux. Moreover, customers can access the store regardless of the type of handset they use or their service providers.

SK Telecom is the leader in the Korean wireless market, enjoying approximately 51% market share. However, competition has increased in the Korean mobile market due to the consolidation of KT Corp. (KTC) and its wireless unit KT Freetel in June 2009. As such, SK Telecom faces greater challenges in retaining wireless market share. Given the high level of wireless penetration in the Korean market, the company is pursuing various business opportunities that will enable delivery of new value-added services to its customers.

SK Telecom remains a dominant player in the Korean smartphone market with a rich portfolio of handset offerings, including the new BlackBerry Bold smartphone. Increased adoption of smartphones and associated data services continue to boost ARPU (average revenue per user).

To further strengthen ARPU, the company plans to introduce 40-45 new handset models during 2009 (including the potential launches of iPhone and Google's G1 android phone) and introduce diverse mobile applications. Launch of T Store represents an integral part of this effort, which is expected to yield revenues of KRW 1 trillion (US$778 million) by 2013.

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