Oct 5, 2016

SK Telecom’s IoT strategy looks beyond Connected Devices

Over the summer, Korea’s SK Telecom outlined its strategy to capitalize on the IoT opportunity. From a networking standpoint, SK Telecom has invested in a nationwide LoRa network. It plans to offer a hybrid offering in parallel with LTE-M over its conventional mobile network. This combination allows SK Telecom to span a wider spectrum of coverage and cost-structure alternatives. Its technology choices use licensed and unlicensed spectrum, support differing data-rates, and, offer a broad range of embedded module costs to deal with barriers to adoption in low price-point (or low perceived value) devices.

The important message from SK Telecom’s strategy is that it is not treating the installed base of connected devices as the ultimate objective. Instead, the number of connected devices is a stepping-stone to create new services, via innovative business models within a growing eco-system of non-telco partners. Here is what Gwang-Seok Shin, Head of SK Telecom’s IoT Solution Division had to say on the matter [1]:

“The overall IoT strategy direction for SK Telecom would be rather than focusing on securing short-term revenue, we want to utilize the IoT business so that we can first of all secure greater data, and secondly develop and attempt various business models related to the IoT business and thirdly create an ecosystem in partnership with various third-parties which will enable us to achieve the first and second gold (sic). And by doing so, we will focus on creating actual business models and monetization after that.” 

SK Telcom’s business strategy envisages a set of basic B2B and B2C business models which it then expands (to B2B2B/B2B2C arrangements) to other entities. In the smart home scenario, for example, the other entities include construction, rental and security companies.

 In the context of its other service offerings, it is important to note that SK Telecom has laid out an evolution beyond the traditional MNO business of tariffed telco services. Through the introduction of three platforms (for media, lifestyle enhancement and IoT), SK telecom plans to launch a wide range of on- and off-line services through a convergence of these three platforms.

In time, the company wants to position itself as an ‘intelligent life partner’, leveraging AI and personalization to offer tailored services across all aspects of an individual’s life. This progression is very much in line with the idea that IoT is a stepping-stone to digital services, which position the company much closer to the higher revenues and value potential that consumers and business partners are willing to pay for. It also forces the company to develop and operate with a different mindset that prioritizes platform business models for eco-systems that include non-telco business partners and service providers.

The interesting next-step for SK Telecom is how and when to expand its operational reach into devices and sensors that rely on short-range connectivity technologies. By most estimates, these account for the majority of all IoT devices.

[1] http://telecoms.com/474529/sk-telecom-outlines-iot-strategy-and-plays-up-iptv-performance/

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  1. 9 Nov 2022 update

    SK Telecom unveils strategy to become an AI company

    Last year, SK Telecom rearranged its business into five different groups, namely fixed and mobile telecommunications, media, enterprise, AIVERSE (AI+Universe), and connected intelligence

    South Korea’s largest telco, SK Telecom, aims to become an artificial intelligence (AI) company, the telco’s CEO Ryu Young-sang said during a meeting with employees.

    Ryu stressed that SK Telecom will shape itself into an AI company by combining AI with a wide range of connectivity technologies. “We will leap into SK Telecom’s version of a distinguished AI company that combines AI with connective technologies based on our main business of telecommunications,” the executive said.

    To achieve the new vision, the carrier unveiled the following three strategies designed to innovate its five business groups. Last year, the company rearranged its business into five different groups, namely fixed and mobile telecommunications, media, enterprise, AIVERSE (AI+Universe), and connected intelligence.

    Firstly, the carrier said it will redefine its core businesses with AI. By achieving AI transformation of its fixed and mobile telecommunications, media and enterprise businesses, the company said it aims to create new opportunities and growth drivers.

    SK Telecom said it will improve the overall process to enable customers to search, subscribe to and use fixed and mobile telecommunications services with greater convenience and ease by applying AI to this entire process.

    In the media business, the company said it will integrate its media-related assets that are scattered across diverse media services like IPTV and T Commerce to strengthen its content power. It will also combine AI technology to these assets to offer personalized content to customers.

    In enterprise business, it will facilitate AI transformation of its enterprise customers through the six main business areas – namely data center, private network, IoT, cloud, big data and AI.

    Secondly, SK Telecom will strengthen customer relationships by applying new technologies and content to AI-based services like ‘A.,’ ‘ifland’ and ‘T Universe.’

    Thirdly, SK Telecom said it will invest in or acquire companies that can create greater synergies when combined with its AI technologies.