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Nokia Licenses Software to Matsushita

With mobile phones increasingly taking on the characteristics of their PDA cousins, both Microsoft and Palm have begun eyeing the potentially lucrative market for mobile phone software. But market leader Nokia is not going down without a fight, and Wednesday it struck a deal with phone manufacturer Matsushita Communication Industrial Co., which produces phones under the Panasonic brand, in a pre-emptive strike to help it lock down the market.

Matsushita agreed to license Nokia's Series 60 software -- a software platform for smart phones which consists of telephony and personal information management applications, a browser and messaging clients, and a modifiable user interface. Microsoft's competing offering, the PocketPC 2002 Phone Edition, combines PDA capabilities with integrated wireless voice and data capabilities.

The Series 60 software is not expected to immediately be a big revenue generator for Nokia. In fact, the company is licensing the software as a source-code product to other mobile handset manufacturers, meaning a low licensing rate intended to spur adoption of its software. The company has been making good progress in that regard; it has already licensed the product to Siemens AG. According to research firm Strategy Analytics, Nokia, already the world's largest handset maker, Siemens and Matsushita account for 47 percent of global mobile phone unit shipments.

However, analysts have suggested that Nokia needs to win the software battle or risk having another company's offering become the defacto standard for the industry. To that end, in addition to the attractive licensing terms, Nokia is also trying to lure developers through software design and a programming interface which the company said would make it easy for developers to access its product platforms.

Nokia's Series 60 software runs on the Symbian OS developed by Symbian Ltd., a consortium formed by Nokia, Sony-Ericsson Mobile Communications, Motorola, Psion, Siemens and Matsushita. Nokia holds a 20 percent stake in the consortium.