Nokia’s announcement to buy the remaining 52.1% of Symbian shares that it didn’t yet own, and to create the Symbian Foundation, is a shrewd response to growing threats from other providers of mobile phone software.
I think Nokia was worried about the risk that Symbian’s structure would erode its competitive position. Over the last 10 years, Symbian has grown into the dominant supplier of smartphone operating systems, but it’s being challenged by a variety of new contenders.
The LiMo Foundation (promoting the Linux operating system) has strong support from network operators, which have been attracted by its governance model. Operators believe that they have more opportunity to influence the direction of this open-source platform than with Symbian and its S60 and UIQ user interfaces.
Apple has raised the bar from a technical perspective, and Symbian licensees need to respond quickly to its touch-screen user interface, high performance and easy-to-use development tools.
Google, meanwhile, has challenged the commercial model, stating that its Android platform has reduced the cost of software to ‘close to zero’.
It was only a matter of time before Nokia bought out its five partners in Symbian. CCS Insight estimates that Nokia paid out more than £127m in Symbian licence fees in 2007, so it makes commercial sense to buy Symbian for about £208m, rather than keep paying what is effectively a subsidy to the other shareholders.
Symbian Foundation will introduce an open-source licence model for the Symbian operating system and the S60, UIQ and MOAP platforms.
However, can the new entity really be open when Nokia has such a vested interest? This may be the stated goal, but in practice it might be more difficult to achieve.
And is it too late? It has taken a sharp increase in competition from Google, Apple and the LiMo Foundation to force this move. Perhaps Nokia should have done this after it bought Psion’s 31.1% stake in July 2004. This would certainly have made LiMo a less attractive proposition, and Sony Ericsson and Motorola would have been able to use their resources more effectively on a unified platform.
Nokia will surely have considered buying Symbian and integrating it as a software platform alongside Series 30 and Series 40. Perhaps the fear of intervention by a monopoly regulator meant that it favoured the creation of a standalone entity.
In my view, had Symbian been created today, it’s likely that this is the sort of structure that would have been adopted anyway – particularly given the current trend towards open-source software platforms. Ironically, it might even make Microsoft’s Windows Mobile and Google’s Android look overly proprietary and dominated by a single player.
If Nokia’s new approach works it could be of great benefit to the Symbian platform. Wider input from network operators and chip manufacturers, as well as closer integration of the operating system and user interface, should make it more stable and more attractive to operators, developers and consumers.
Alternatively, governance by committee may see Symbian slipping even further behind. That seems difficult to believe given that Nokia knows how urgently it has to act.
This new entity will be steered by a board of 10 members: five from phone manufacturers - Nokia, LG, Motorola, Samsung and Sony Ericsson - and five from network operators and chip manufacturers - AT&T, NTT DoCoMo, Vodafone, STMicroelectronics and Texas Instruments.
The involvement of nine other companies on the foundation’s board offers an elegant way to keep other Symbian licensees committed to the platform. Sony Ericsson and Motorola need UIQ to continue in some guise to support current product roadmaps. NTT DoCoMo needs MOAP for the Japanese market.
There is no doubt that this is an ambitious move by Nokia. Whether it really will end up having universal support from all its participants remains to be seen, but it definitely changes the mobile software landscape forever.
Geoff Blaber is an analyst at CCS Insight