Chapter 758: Let’s Release in the U.S. and Korea Simultaneously

Steve Jobs’s invitation to me to the negotiation table with the U.S. telecommunication companies was similar to how he used Verizon as bait to lure AT&T.

“Jobs, launching the iPhone in Korea will be difficult. The iPhone is based on the GSM communication standard after all.”

GSM is a second-generation communication standard developed in Europe.

It was also a communication standard not used in Korea and Japan.

“On the other hand Korea adopted CDMA. Ah, now that I think about it, the reason you chose AT&T must be because of GSM. Unlike them, Verizon uses both CDMA and GSM.”

Jobs nodded and added.

“The U.S. uses both GSM and CDMA. But the reason we adopted GSM is obvious isn’t it?”

“Of course. It’s because of Europe. And it’s also time to move from the second to the third generation.”

“Talking with Charlie means I don’t have to explain myself! My idiots don’t understand my thoughts!”

Jobs seemed pleased that I understood him so well, clapping his knee in delight.

“We’ve already prepared both a 2G GSM version and a 3rd generation WCDMA version.”

“The iPhone 3G?”

He already prepared it? Just from a few hints, the development is progressing this quickly.

“How do you know that name?”

“Um… well since it’s a third generation mobile communication I thought that’s what it would be called.”

“Hahaha, you are indeed worthy of naming the iPhone. Yes, that’s exactly what we call the iPhone 3G. It is primarily based on WCDMA, but it can also use CDMA and GSM if the connection is lost.”

I clicked my tongue internally. Jobs was a meticulous businessman indeed.

If Verizon had agreed to a contract, he would have presented that model.

“Originally, I was planning to refine and upgrade it and release it in two years. If Verizon had signed with us the release date would have been sooner.”

“So, you’re saying you’re moving the release date forward because of Korea?”

“Of course. Otherwise, why would I bother doing this, Charlie?”

I looked at him suspiciously.

Should I believe that he’s doing a simultaneous release because of me?

However, Jobs continued speaking, unfazed by my suspicious gaze.

“We’ll release both versions in the US as well. AT&T doesn’t have a proper infrastructure yet, so the GSM version will be the main seller.”

“So that’s why one of the contract terms was to expand the third-generation mobile communication infrastructure.”

“Exactly. I’m planning to upgrade and release a new iPhone every year. In a few years, second generation will be obsolete and third generation mobile communication technology will dominate.”

It took a considerable amount of time for communication standards to shift from 2G to 3G. After that, communication technology developed rapidly.

“And the true iPhone starts with 3G since it needs to have video calls. It’s hard for 2G to handle the data.”

“Video calls? I didn’t see a front-facing camera on the unveiled iPhone.”

“It hasn’t been released yet, so there’s no need to install a front camera. The 3G version already has it.”

Jobs seems to have everything planned. I nodded.

“That’s all good. If it’s WCDMA, there probably won’t be any major problems since Korea also has the infrastructure. Seoul, Gyeonggi Province and the major metropolitan cities already have the service. But isn’t there still a major issue left?”

“Are you talking about WIPI? That’s why Charlie should take the exclusive sales rights in Korea. Charlie can do anything, right?”

“You’re telling me to get rid of WIPI.”

Of course, it wasn’t a difficult task.

It hasn’t been long since the mandatory WIPI installation was implemented so it was within my capabilities to abolish it.

“Right. And Charlie will also take care of all kinds of permits. Are we strangers after all?”

He picks up all the bad habits and uses them all.

It meant that I had to solve all the annoying issues.

“Okay. But an exclusive deal in Korea isn’t enough. Please expand the scope to include Korea, China and Japan.”

“Are you asking for exclusive rights for all of East Asia?”

I nodded, and Jobs rubbed his chin and spoke.

“Since you are the major shareholder of Apple, that’s not a problem. But for Japan, we already have a partner in mind.”

“SoftBank?”

“Who else would it be?”

“I will also be assigning the contract to them. But I’ll get a better deal myself.”

After thinking for a moment, Jobs nodded.

“Alright. Since Charlie can do better than I can I’ll give you the right to sign the exclusive sales for those three East Asian countries.”

“So when is the release?”

“Around May or June of next year? The exact release date hasn’t been decided yet.”

“That’s the release date in the U.S. What about other countries?”

“Europe will be that winter, and other countries around the spring of the year after that?”

I shook my head at his vague words.

“Let’s release in the U.S. and Korea simultaneously. That much has to be done for me to work comfortably.”

Jobs narrowed his eyes.

“A simultaneous release is impossible…”

Looking at Jobs’s reluctance, he seemed to have already signed a production contract based on the U.S. release.

“Is the production being handled by Foxconn?”

Foxconn, the world’s largest EMS company, was a Taiwanese company specializing in contract manufacturing of electronic products.

Apple produced most of its products such as the iPhone and iPod through Foxconn.

“Foxconn is our main manufacturer, but we have contract manufacturing agreements with various other manufacturers as well.”

“Do we absolutely have to do contract manufacturing? Do you have no plans for direct production?”

Apple insisted on a structure where design was done at the U.S. headquarters and production was outsourced.

“It’s efficient to do what we can do ourselves and leave production to external manufacturers. Foxconn has large-scale production facilities and manufacturing know-how. That is why they efficiently produce our products.”

“That might be the case now, but if we start preparing now, we can eventually produce independently.”

Apple is a company that revolves around loyal customers.

Therefore, it was better to give a satisfactory user experience through independent production as soon as possible.

“Well, I have no plans to do that yet. Foxconn is already expanding its production factories in China.”

The moment I heard the keyword of Foxconn’s expansion of factories in China something flashed through my mind.

‘This might be an important weapon to use to attack China?’

I quickly organized my thoughts and opened my mouth.

“What if Apple cancels its production contract with Foxconn?”

“Apple’s production volume of all electronic devices would be paralyzed by more than half.”

“No, not Apple’s damage. I’m asking about Foxconn’s damage.”

“They would probably go bankrupt. They’ve already invested a huge amount of money in building production factories in China due to the contract with us. There wouldn’t be any other companies to keep them afloat other than us.”

There wasn’t a manufacturing company as big as Foxconn that had advanced into China yet.

Just as I thought, it seemed that I could shake China through the iPhone.

“Jobs, if Apple manufactures the products in China could we cancel our contract with Foxconn whenever I want?”

“What? What kind of crazy talk is that…”

Jobs was so shocked that his voice rose. I interrupted him and continued.

“No. I’m not saying that we should cancel the contract necessarily. I’m saying what if we ask them to close their factories and if they still don’t listen.”

“…While Foxconn mainly manufactures our Apple products they also manufacture various other products for other companies.”

“I roughly know. I will contact all of the companies separately. But it’s most effective if Apple moves. Apple is their biggest customer after all.”

Jobs groaned as if he was conflicted and then answered.

“That’s true… but if you make that kind of decision, the relationship with the Chinese government is bound to become strained. Charlie, what’s the reason for this?”

“I am currently in a war with the Chinese government.”

Starting with that statement, I explained in detail the dispute that I’m having with China.

After hearing all the explanations Jobs stared at me as if I was crazy.

“We have to approach it differently from the U.S. or Japanese governments. Just the fact that Foxconn announces that they are withdrawing from China would shock the Chinese government.”

“I understand the reason. I’ll help if there’s anything I can do. But the chairman of Foxconn is pro-China even among Taiwanese people. Even if I ask, I don’t know if he’ll listen.”

“Jobs, there are mobile phone manufacturers in Korea called KS Teletech and Pantech.”

Jobs already seemed to know about them, nodding as he listened to me.

“I know. They are smaller than Ilseong Electronics and Geumsung Electronics but they are still quite famous mobile phone manufacturers in Korea, aren’t they?”

“Suggest that Apple acquires them. Then Foxconn will be startled and start watching Apple’s moves.”

Startled, Jobs’s voice grew louder again.

“What? Acquire them?”

“Yes. If we acquire those two, we’ll have enough production facilities.”

“Would they sell them?”

“I don’t know about Pantech, but KS Teletech will sell.”

KS Teletech was a subsidiary of KS Telecom, created to make devices only for KS Telecom.

As if to tell me to explain more, Jobs stared intently at me.

“It doesn’t matter even if we can’t acquire them. We can use them as a card to move Foxconn. But I’d prefer to acquire them if possible. The production volume from there can be sent to Korea and Japan.”

After thinking for a while, Jobs shook his head.

“No matter how much I think about it, there’s no reason to. We fixed the profit rate per unit at 3% when we signed the iPhone production contract with Foxconn. It’ll be hard to reduce the manufacturing cost lower than that.”

“Then just use it for pressure.”

“It’s not a good look to enter acquisition negotiations then withdraw.”

Jobs’s mumbling tone was full of reluctance.

“Don’t worry. If Apple withdraws from the acquisition battle I’ll acquire them and turn them into an iPhone production factory. But 3% is too low, make it 5%.”

“5%…”

“You know it’s a piece of cake to get the board of directors to approve of it if I set my mind to it? The only reason I’m not doing it is out of respect for you Jobs.”

“Oh jeez. Really.”

Jobs chuckled and chided me.

“So do it.”

“Tell me more about your plan.”

“So…”

I explained my plan in even more detail to Jobs who was looking at me with playful eyes.

* * *

In the end, it was decided that the iPhone would be released simultaneously in the U.S. and Korea.

Tim Cook was against it, but thanks to Jobs strongly pushing it, I was granted exclusive rights in Korea, China and Japan.

After that, I told Han Gyeong-yeong to have a meeting with the US companies that signed a contract with Foxconn and ask them to move with Apple.

After finishing all the schedules I boarded my private jet and headed to Korea.

The unveiling of Apple’s iPhone was also heating up Korea.

Of course, unlike in the U.S. most of the articles were negative.

[Apple iPhone Revealed. Rumors Confirmed.]

The news article from Naver, Korea’s top portal, as well as all the comments were negative.

—What’s the difference from a PDA?

—That thing is gonna fail. The functionality is good but the size is terrible.

—We already have MP3s and local phones with long-lasting batteries and good text messaging and calling, so what’s the point?

It seemed like the articles were written by reporters who had been lobbied by Korean manufacturers.

The comments also seemed to be done by part-timers.

It was clear from the hundreds of articles that were criticizing the iPhone for no reason.

Not only IT experts, but even stock market reporters all came together in criticizing the iPhone.

But one person, the founder who created the Korean word processor was different.

He posted on a community that the iPhone seemed like it would be a game changer that would greatly change the market.

He also wrote that the next generation model of the iPhone would probably have 3G and that existing cell phones would slowly disappear and the age of smartphones would come.

However, unlike the visionary post, most of the comments were sarcastic.

The moment I saw the post, I couldn’t help but be amazed.

“Wow, did this guy also come from the future?”

Just as this man predicted, the age of smartphones will start because of the iPhone and the age of Wi-Fi will also begin.

After a long flight, I arrived in Korea. I went to the KS headquarters to meet with Choi Woo-sik the chairman of KS Group.