Company employee Mr. Song (40) heard the news of the abolition of the Device Subsidy System on the 22nd and went to a mobile communication retail store to consult about activating Samsung Electronics' foldable phone "Galaxy Z Flip7 (256GB·1,485,000 won)." The common subsidy from the three telecommunications companies was up to 500,000 won, with no differences. Additional subsidies were also similar, ranging from 250,000 to 300,000 won. However, the SK Telecom dealership informed that if one activates the "Galaxy Z Flip7" with a plan in the 100,000 won range, they would receive the latest smartwatch "Galaxy Watch8 (489,500 won)" for free.
Since the abolition date of the Device Subsidy System on the 22nd, SK Telecom has been confirmed to be providing a new promotional strategy by offering new foldable phones from Samsung Electronics for free when customers purchase and subscribe to high-cost plans at their retail locations. This is interpreted as a marketing strategy through support for wearable products, allowing sharing of expenses via manufacturers instead of increasing additional subsidies that telecommunications companies cover at 100%.
According to the telecommunications industry on the 24th, the Galaxy Watch8 sold on SK Telecom's official online mall, T Direct Shop, has been confirmed to be sold out before its official launch on the 25th. In contrast, it is still possible to apply for purchases on KT and LG Uplus online malls.
The early sellout of the Galaxy Watch8 at SK Telecom, the number one provider with the largest volume secured among the three mobile operators, is attributed to the promotional activities involving the free Galaxy Watch8, according to industry sources. On the 22nd, when the Device Subsidy System was abolished, SK Telecom announced that it would discount the cost of the Galaxy Watch8 by 12,000 won per month on the condition of activating the "Galaxy Z Flip7" and "Fold7" with a plan of over 76,000 won, which is considered to formalize the promotional strategy utilizing the Galaxy Watch8.
In fact, at an SK Telecom retail location in the Jung-gu district of Seoul on the 22nd, it was announced that if one purchases the Galaxy Z7 foldable phone and subscribes to a plan in the 100,000 won range, they would be exempt from the total smartwatch fee (12,000 won per month) of 288,000 won over two years and would receive the Galaxy Watch8, priced at 489,500 won, for just 50,000 won. A staff member at the store said, "I believe there are no stocks currently available for shipment to the SK Telecom online mall. I understand that many Galaxy Watch8 units have been moved to offline stores for promotional purposes."
At SK Telecom retail locations in Yeongdeungpo-gu and Gangnam-gu, the same conditions were offered, stating they could give the Galaxy Watch8 for free. Excluding the smartphone subsidy from the telecommunications company, the benefits received from the Galaxy Watch8 amounted to a total of 777,500 won over two years. A staff member at the Yeongdeungpo-gu retail location said, "KT and LG Uplus do not support the Galaxy Watch8. Currently, SK Telecom does have the best benefits."
Initially, the telecommunications industry anticipated that with the abolition of the Device Subsidy System, SK Telecom would significantly increase in-store additional support to recover the number of subscribers lost due to hacking incidents. According to the Ministry of Science and ICT, SK Telecom's market share was recorded at 39.2% of all mobile communication subscribers last May. This marks a decline below the 40% threshold, ten years after the market share dropped below 50% in February 2015.
In the case of the Galaxy Z Flip7, if all the common support (500,000 won), the additional support (250,000-300,000 won), and Galaxy Watch8 support (777,500 won) are combined, consumer benefits exceed 1.5 million won. This means that SK Telecom could have sufficiently provided the 1,485,000 won Galaxy Z Flip7 as a free phone. However, SK Telecom chose a more indirect method of providing the latest "smartwatch" instead of engaging in a subsidy price war.
A telecommunications industry official noted, "If SK Telecom had drastically increased the additional subsidies, KT and LG Uplus would have also found it challenging to avoid a subsidy price war. As a result, the marketing expense burden shared by the three telecommunications companies would have surged. Even if SK Telecom provides the Galaxy Watch8 for free, it would be difficult for KT or LG Uplus to secure sufficient quantities later, thus avoiding a price war," they added. They continued, "If promotional marketing for smartwatches is linked with new foldable phone products, Samsung Electronics will need to share marketing costs with SK Telecom to some extent."
An SK Telecom official explained, "I understand this is a promotion initiated not by the headquarters but by the retail network itself."