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Nokia’s play to open source Symbian, the world’s most popular mobile phone software, could not only advance the Finnish handset maker’s portfolio strategy, but also may stymie efforts by Microsoft and Google to steal market share.
The global smartphone leader said yesterday it planned to spend $410 million to buy all of Symbian — in which it already owns a large stake — to create a new, royalty-free mobile software platform.
At the same time, it pledged to release Symbian’s mobile OS to the open source community through a new organization it created called the Symbian Foundation. (The foundation will also release Nokia’s (NYSE: NOK) S60, a five-year-old Symbian-based platform designed for its higher-end handsets.)
News of the open sourcing of the world’s leading mobile platform sent shockwaves through the fiercely competitive mobile services space, where carriers and handset manufacturers are increasingly looking to software features to set them apart from the competition.
This month alone saw the arrival of the next generation of Apple’s popular iPhone, while the market is also bracing for further upheaval: Internet heavyweight Google (NASDAQ: GOOG) is widely expected to release its open source mobile OS, Android, during the second half of the year, while efforts to promote mobile Linux by the LiMo Foundation continue to gain traction.
“It’s no longer about making devices sleek but making them sing and dance,” Carmi Levy, senior vice president for strategic consulting at AR Communications, told InternetNews.com.
It’s all about the software
As a result, industry observers see Nokia’s gambit as an effort to shore up its software — it relies principally on Symbian-based OSes like S60 — against handset rivals using Microsoft software, while insulating itself from new, and potentially fast-moving competitors like Google.
“This move from Nokia makes enormous sense both from an offensive and defensive position,” telecom analyst Jeff Kagan told InternetNews.com. “They want to lead, but they also don’t want to follow.”
Nokia for some time has been signaling its interest in using open source to add new features to the software on its handsets. In January, the company spent $150 million to snap up open source software vendor Trolltech, giving it control of the firm’s Qtopia mobile application development framework. The technology had earlier found success in products from Nokia rivals including Motorola (NYSE: MOT).
Nokia has also looked into ways to bridge the divide between its S60 Symbian variant and Linux.
For Nokia, taking the lead on a major open source effort also represents an opportunity for deeper U.S. market penetration. While it dominates in Europe — thanks to its handsets’ support for GSM, the primary European network system — it has thus far failed to gain similar levels of traction in the U.S., where the rival CDMA system reigns.
That may change as a new generation of high-speed, data- and application-friendly mobile networks arrive on the scene. With Long-Term Evolution and WiMAX laying the groundwork for richer application experiences, Nokia is positioning itself to take advantage of the trend by making it easier for developers to build on its platforms.
“This gives up a real opportunity to use Symbian to provide a richer product ecosystem,” Lee Williams, senior vice president for S60 software at Nokia, told InternetNews.com.
Microsoft, Google face a new open source rival
Meanwhile, for rivals looking to unseat either Nokia or Symbian, the news may mean tough times ahead.
According to first-quarter figures from Canalys Research, Symbian holds 58.7 percent of the worldwide OS smartphone market. Microsoft (NASDAQ: MSFT) platforms share second place with Research in Motion’s (NASDAQ: RIMM) proprietary BlackBerry device OS, each controlling 13.7 percent of the market. Linux holds 5.7 percent while Apple makes up 5.4 percent.
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But pundits now see a potential snag in Microsoft’s plans, with Nokia’s maneuver forcing proprietary players like it to change their pricing strategy, given the lower costs likely to be associated with a royalty-free, open source Symbian.
“It may be difficult for Microsoft to continue to justify its relatively high license fees for an OS that competes with a fully featured one that is offered for free,” Jack Gold, founder and principal analyst, J.Gold Associates, told InternetNews.com.
While Gold doesn’t expect Windows Mobile to disappear, he does believe Microsoft will have to be much more competitive in pricing if it wants to remain a major player.
“It will have to make its revenues on applications and services instead,” he said.
Page 2: Microsoft and Google respond
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However, Microsoft dismissed the threat from Nokia’s move. Instead, spokespeople said Microsoft views Nokia’s buyout of Symbian as a confirmation of its own strategy.
Microsoft has “already taken an open platform approach to helping handset makers, mobile operators and developers innovate on top of Windows Mobile platform,” Scott Rockfeld, group product manager at Microsoft, told InternetNews.com. “Today’s announcement just validates that software and services are what drive mobile phone innovation, the approach we’ve been taking for over six years.”
“In the short term, it doesn’t change much, as Nokia already owned a majority of Symbian,” he said. “In the long term, they open themselves up to the same challenges that other open source operating systems have encountered, including fragmentation.”
In addition to a potential swipe at Windows Mobile, Nokia’s open source strategy also strikes industry watchers as a hedge against the Google-led Open Handset Alliance, which is expected to release the open source mobile OS, Android, later in the year.
Gold, for instance, views the Symbian Foundation as a direct challenge to Linux-based Android and its “open source ‘roots.'”
But Nokia waved away the notion that by open sourcing Symbian, it sought to undermine Google and the traction that it’s already gained in the open source community.
“This is not a reaction to Android,” Williams said, suggesting instead that Nokia doesn’t view the as-yet-unreleased OS as a rival, despite its backing by such big names as LG Electronics, Motorola, Samsung Electronics, T-Mobile, Intel and Qualcomm.
Williams noted that Nokia has shipped 200 million products, while Google’s Android has yet to appear in the marketplace — and may even be delayed until late in the year, according to recent reports in the Wall Street Journal.
“We’re present. We have the devices. We have a complete tech stack,” Williams said.
Nokia won’t be alone in supporting an open source Symbian, either. While it leads the Symbian Foundation, through which the mobile OS software will be released, Nokia also has pulled other brand-name carriers and handset manufacturers on board, including Sony Ericsson, Motorola (NYSE:MOT), LG, Samsung and Texas Instruments.
Several carriers have also pledged their support to the Symbian Foundation, Nokia said — including NTT DOCOMO, AT&T (NYSE: T) and Vodafone (NYSE: VOD), which operates Verizon Wireless in a joint venture with Verizon Communications (NYSE: VZ).
Such a collaborative effort, which Nokia said aims to release a new Symbian platform by next year, will ignite what Levy called “a huge battle for the hearts and minds of mobile users.”
Noting that companies like Motorola and Samsung are also part of the Android development program, Gold said it’s unclear whether they will remain committed to Google’s project.
Google, meanwhile, said it welcomed the Symbian news.
“Openness fosters innovation, benefiting consumers,” the company said in a statement sent to InternetNews.com. “We’re very pleased to see other major players in the mobile industry moving in this direction.”
Google spokespeople declined to comment further.
Despite Nokia’s ambitious plans, other analysts aren’t convinced that it will ever fully succeed in setting up Symbian as a de-facto standard in the mobile space, with Kagan noting that the wireless phone industry has always supported a number of OSes concurrently.
“At this point, we don’t know who will lead, or even if it matters,” he said. “Like always, there will be a variety of competing technologies. The customer won’t really care how they can do what they want, as long as they can do what they want.”
