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Press Release
Wider Choice and Various Enhanced Services for Consumers Expected
IMT-2000 Handsets Enabling Video Phone Under Development
SK Teletech, joint venture of SK Telecom and Kyocera, Japan, announced today that it would start to produce high quality CDMA cellular phone handsets under the OEM contract with Sewon Telecom in December. SK Teletech has 37.8 billion won in paid-in capitalization and SK Telecom and Kyocera have 72.5% and 27.5% stake in the company, respectively.
SK Teletech made an agreement for joint manufacturing of wireless communications handsets with Sewon Telecom in July 1998, signed the agreement to create a joint venture and the technology cooperation agreement on September 2 and paid up the capital on September 18.
SK Teletech says that it is taking advantage of the operational know-how of SK Telecom, the first CDMA-based cellular service provider in the world, and the world-class PHS and CDMA handset technology of Kyocera to make ultra light and super convenient handsets that will deliver high call quality and dramatically increased call time thanks to the energy-efficient design. The handsets will also have the security features and enable display in Korean. The company says that it will differentiate its products by offering handsets in a wide variety of colors and designs and it is targeting high-end markets. With Kyocera, it will seek to enter overseas markets such as China and Australia, the company says.
SK Teletech will be in charge of product design and marketing and Kyocera will be responsible for technology development, quality control and marketing in the overseas markets. Sewon Telecom will do the manufacturing.
A Wider Consumer Choice In comparison with PCS, the choice of handsets for cellular users has been relatively limited. But with the entrance of SK Teletech into the handset market, consumers are expected to enjoy a wider choice.
Timely Delivery of A Variety of Enhanced Services
Value-added or enhanced services are an important factor when it comes to competition. Therefore, it is very important to develop and deliver the services in a timely fashion to remain competitive and the handset technology plays a critical role in this. The competition among cellular service providers such as SK Telecom has been restrained partly because of the delayed supply of handsets whatever value-added services they have. However, this will change once the timely delivery of a wide variety of enhanced services by service providers becomes possible and the competitiveness of the cellular service providers will also dramatically improve.
In addition, SK Teletech is developing handsets enabling IMT-2000 multimedia communications services to offer further enhanced services.
Improved International Competitiveness in Handsets
The Korean handset market has been dominated by three large manufacturers and closed to competition from new entrants. However, international competitiveness is fostered by fierce competition among local manufacturers and therefore the current oligopolistic market system precludes improvements in competitiveness. The domestic market will be open to foreign competition in 1999, making competition with the international handset makers unavoidable. In this respect, the entrance of SK Teletech that has a ready access to operational know-how of SK Telecom and the advanced handset manufacturing technology of Kyocera into the market is very significant in improving international competitiveness.
Fostering a Technically Competitive Small Business
SK Teletech’s handsets are manufactured by Sewon Telecom, a small business, under the OEM agreement and it does not have the problem of "overlapping" investment, which is the case with many other businesses. Since responsibilities are allotted clearly among the three companies, there is no room for SK Teletech and Kyocera to interfere with the manufacturing for which Sewon will be solely responsible. It can be said that this is a model case in which a large corporation helps a small business grow instead of preying on it.
The entrance of SK Teletech into the handset market is expected to result in increased competition, enhanced quality, lower price and, ultimately, in improved international competitiveness.
SK Teletech made an agreement for joint manufacturing of wireless communications handsets with Sewon Telecom in July 1998, signed the agreement to create a joint venture and the technology cooperation agreement on September 2 and paid up the capital on September 18.
SK Teletech says that it is taking advantage of the operational know-how of SK Telecom, the first CDMA-based cellular service provider in the world, and the world-class PHS and CDMA handset technology of Kyocera to make ultra light and super convenient handsets that will deliver high call quality and dramatically increased call time thanks to the energy-efficient design. The handsets will also have the security features and enable display in Korean. The company says that it will differentiate its products by offering handsets in a wide variety of colors and designs and it is targeting high-end markets. With Kyocera, it will seek to enter overseas markets such as China and Australia, the company says.
SK Teletech will be in charge of product design and marketing and Kyocera will be responsible for technology development, quality control and marketing in the overseas markets. Sewon Telecom will do the manufacturing.
A Wider Consumer Choice In comparison with PCS, the choice of handsets for cellular users has been relatively limited. But with the entrance of SK Teletech into the handset market, consumers are expected to enjoy a wider choice.
Timely Delivery of A Variety of Enhanced Services
Value-added or enhanced services are an important factor when it comes to competition. Therefore, it is very important to develop and deliver the services in a timely fashion to remain competitive and the handset technology plays a critical role in this. The competition among cellular service providers such as SK Telecom has been restrained partly because of the delayed supply of handsets whatever value-added services they have. However, this will change once the timely delivery of a wide variety of enhanced services by service providers becomes possible and the competitiveness of the cellular service providers will also dramatically improve.
In addition, SK Teletech is developing handsets enabling IMT-2000 multimedia communications services to offer further enhanced services.
Improved International Competitiveness in Handsets
The Korean handset market has been dominated by three large manufacturers and closed to competition from new entrants. However, international competitiveness is fostered by fierce competition among local manufacturers and therefore the current oligopolistic market system precludes improvements in competitiveness. The domestic market will be open to foreign competition in 1999, making competition with the international handset makers unavoidable. In this respect, the entrance of SK Teletech that has a ready access to operational know-how of SK Telecom and the advanced handset manufacturing technology of Kyocera into the market is very significant in improving international competitiveness.
Fostering a Technically Competitive Small Business
SK Teletech’s handsets are manufactured by Sewon Telecom, a small business, under the OEM agreement and it does not have the problem of "overlapping" investment, which is the case with many other businesses. Since responsibilities are allotted clearly among the three companies, there is no room for SK Teletech and Kyocera to interfere with the manufacturing for which Sewon will be solely responsible. It can be said that this is a model case in which a large corporation helps a small business grow instead of preying on it.
The entrance of SK Teletech into the handset market is expected to result in increased competition, enhanced quality, lower price and, ultimately, in improved international competitiveness.