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Nate.com, Lycos Team Up, Make Big Difference

Posted February. 23, 2003 22:26,   


˝Two small players are teaming up, so what?˝ When SK Telecom announced in June last year a plan to launch SK Communications by merging portal Lycos Korea into its PC communication business unit Net`s Go (Nate.com), industry insiders doubted whether it would make any difference.

▽Struggling Businesses Team Up = Both Net`s Go and Lycos Korea were initially among big name players in the portal industry.

Established in 1998 as a unit of SK Telecom, Net`s Go lured 100,000 subscribers within a month from the launch under a motto ˝Now is the Time for the Internet,˝ rewriting the history of the PC communication business. At its heyday, the number even reached up to 2.3 million.

Lycos Korea jumped into the portal market later in 1999, under a motto ˝It is not the Internet if it is not fun,˝ to become one of the big three in the industry along with Yahoo!

The booming years did not last long, however, and they soon began to decline in 2001. Net`s Go failed to foresee the coming age of the high-speed Internet, and Lycos Korea was also unsuccessful in its differentiation strategy. Net`s Go saw its subscriber base plunge down to about 800,000, while Lycos Korea tumbled down to the 15th rank.

▽Got Off to a Good Start = The deadline of the consolidation of the two portal sites was set for midnight December 27 2002, and from that moment users visiting `www.lycos.oc.kr` were automatically redirected to `www.nate.com.`

Months before the launch of the integrated site, therefore, the two companies began their effort to look after each other so that users would not feel confused when they were redirected to the other site.

Their biggest concern was a possible breakaway among Lycos subscribers. Some 100 of the total 340 employees watched the successful launch of the consolidated site working all night. And the good news came on the 27th as the number of visitors, which used to be around 400,000 before the consolidation, more than doubled to 850,000.

Then the joint business caught the spotlight a week later as Nate.com jumped to the 8th and the 11th spot in market research surveys from the earlier 25th. Nate.com further advanced to the 4th place as of the end of January this year.

▽Key to Success = SK Communications cites a wire-wireless link service it is offering in league with its mother company SK Telecom as the key to success. The service, `Nate On,` provides a variety of services including mobile-to-mobile and Internet-to-mobile messengers. I

Within about a month since its launch, the service lured some 1 million subscribers. Nate.com now expects revenue from fee content services such as ringtone download to reach 22 billion won this year.

Employees are also exerting their best effort to boost the bottom line. The e-commerce team, for instance, shipped parts to China to produce music boxes as the item gained popularity from hit SBS TV series `All In,` and reaped 300 million won in just 15 days.

SK Communications targets revenue of 55 billion won this year. Yet, it is not likely to swing to profits through this year. The company has a long way to go to catch up with frontrunners. ˝The wire-wireless integrated service is potentially threatening, but we are not seeing any differentiated service of Nate.com just yet,˝ industry observers point out.

˝We are determined not to go through bitter experience again,˝ said employees at SK Communications, adding they are confident about jumping to the 2nd spot in terms of user traffic.

Jong sik Kong kong@donga.com