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Nokia Tightens Symbian Embrace

Seeking tighter control of the software that powers its market-leading mobile phones, wireless phone maker Nokia will pay at least (US) $200 million to up its ownership in Symbian to 63.3 percent.

The move may be aimed in part at parrying Microsoft, which is currently mounting an attack on Symbian's mobile-phone operating system with its competing Smartphone platform. Smartphone is in the early stages of deployment into the marketplace, most notably via a handset offered by Anglo-French mobile operator Orange SA. In the United States, the first two mobile phone models equipped with Smartphone software were released three months ago, from Samsung and Motorola, respectively.

Nokia will increase its current 32.2 percent stake in Symbian by buying out the portion of the company currently owned by Psion. The sale is constituted as a complex, two-part transaction. Nokia will initially pay a base fee of GBP 93.5 million (equivalent to $176.6 million). Subsequently, Nokia will pay a royalty-like fee of GBP 0.88 ($1.55) for each Symbian-equipped device sold in 2004 and 2005. Those additional payments are expected to add about $100 million to the value of the transaction.

Nokia said in a statement that its decision to acquire Psion's shares in Symbian is based on Nokia's confidence in the Symbian OS as a core platform technology for advanced mobile devices.

"It is vital to sustain Symbian's long-term market success in order to enable healthy competition in the OS market and to stimulate innovation throughout the value chain," said Pertti Korhonen, chief technology officer at Nokia.

Symbian has long been owned by a consortium of mobile phone manufacturers. Along with Nokia, stakes are currently held by Sony Ericsson, Panasonic, Siemens and Samsung.

Last summer, Motorola sold off its 19 percent stake in Symbian for $27.46 million.

The Motorola stake was split by Nokia and Psion. That sale moved Nokia into position as the largest single shareholder in the Symbian ownership consortium. While Motorola continues to make equipped most of its phones with the Symbian operating system, three months ago it released its first handset powered by Microsoft's Smartphone software. The Motorola selection marked a major win for Microsoft, as Smartphone lags way behind Symbian

According to figures released earlier this month by market analysts IDC, Nokia in 2003 was the top mobile handset manufacturer with 179.3 million units sold for a 33.6 percent market share. The other vendors in the top five were Motorola, with 14.1 percent of the market, Samsung with 9.9 percent, Siemens with 8.5 percent, and LG Electronics with 5.2 percent.