New York — The world’s largest handset maker Nokia is buying the remainder of Symbian, the consortium that makes the software for its phones and making it available for free to other manufacturers, for $410 million and opening the popular mobile-phone platform through the Symbian Foundation to challenge Google’s Android, Microsoft’s Open Windows and even Apple, Inc.’s iPhone with cheaper smartphones.
Nokia said Tuesday that it has made a cash offer to buy the 52% of Britain’s Symbian that it does not already possess. The Finnish mobile phone giant is willing to pay $410 million for the Symbian’s software as it is widely used on most high-end cell phones today, in hopes of blunting the influence of competing software providers.
Nokia, which already owns 48% of the UK-based firm, further plans to improve its software to compete with Google’s planned Android operating system.
“An analyst expects Nokia will use royalty-free Symbian as a loss leader to drive its growth.”
The acquisition is an elementary step in setting up the Symbian Foundation, which Nokia also announced Tuesday.
Olli-Pekka Kallasvuo, CEO of Nokia, branded the acquisition and the foundation significant milestones in the firm’s software strategy.
“Symbian is already the leading open platform for mobile devices,” Kallasvuo said. “Through this acquisition and the founding of the Symbian Foundation, will undisputedly be the most attractive platform for mobile innovation. This will drive the development of new and compelling Web-enabled applications to delight a new generation of consumers.”
“Nokia Targets At — Microsoft, Google and Apple.”
Nokia also said that Sony Ericsson, Ericsson, Panasonic and Siemens have agreed to trade their stakes in Symbian, except Samsung, have committed themselves to accept the offer and that it expects Samsung to join them shortly.
In the chase to set create a leading standard for phones; the price of the software has become one discriminator. Symbian and Microsoft have been charging royalties for their software, but a leading challenger, the LiMo Foundation, will make software available for free. Google plans to give away its handset software, Android.
According to Nigel Clifford, chief executive of Symbian, it could signal a reversal in how the software platform is developed.
“We are freeing up innovation — this is epoch-making. Nothing like this has been put into the open-source community before.”
The plan is to connect several different existing software programs–Symbian OS, S60, UIQ and MOAP.
The deal is a reasonable move, according to Handelsbanked analyst Karri Rinta.
“There was pressure for Nokia to enlarge its asset, especially since there were owners such as Panasonic and Siemens, who were there for historical reasons.”
According to a recent study from Strategy Analytics, the formation of the Symbian Foundation will be good for Nokia but bad news for Google’s Android and Microsoft.
Neil Mawston, director of Strategy Analytics, anticipates Nokia to use royalty-free Symbian software as a loss leader to drive growth in handsets and services in 2009.
“This is a good move for Nokia, because low priced smartphones for the mass market will eventually drive higher global volumes of Nokia devices and [Nokia’s] Ovi content,” Mawston said.
Bonny Joy, another analyst at Strategy Analytics, said an inexpensive Symbian operating system is bad news for license-based rivals, such as Google’s Android and Microsoft’s Windows Mobile. The change will impact Android on volume and Microsoft on value.
“Symbian will match Android on zero-dollar pricing, and this diminishes one of its major competitive advantages,” Joy said. “For Microsoft, the pressure will surely mount to cut the price of its license fees for handset vendors, which we estimate to be a relatively high $14 per unit worldwide in 2008.”
The foundation also covers another concern from carriers and handset manufacturers, which do not want a single company to control the software like Microsoft does on desktops.
Nokia will further strengthen the foundation with other handset makers Sony Ericsson and Motorola and Japanese carrier NTT DoCoMo to make the software available royalty-free. They will combine their three versions of the Symbian software for advanced, data-enabled phones into one open platform.
AT&T, LG Electronics, Samsung Electronics, STMicroelectronics, Texas Instruments and Vodafone Group, will also join the foundation, Nokia said.
At a Symbian press conference, Kai Oistamo, executive vice-president of Nokia, denied that the takeover was a response to Android.
“This is taking the most proven software to open-source. It has an unparalleled existing ecosystem. It will create a gravitational pull that no developer will be able to ignore,” he said.
Down the line, the acquisition is no surprise. Nokia has been closely associated with Symbian for many years. In fact, Nokia’s Series 65 platform is built on Symbian technology. Nokia’s acquisition is a brave move that demonstrates the heated battle for mobile supremacy, according to Michael Gartenberg, an analyst at JupiterResearch.
There are two battles going on, he explained. One is for the heart and minds of handset makers. The other is attracting developers.
“Certainly, Nokia is hoping to put pressure on not only Android but Windows Mobile but also on Apple’s iPhone," Gartenberg said.
By giving away the software, Nokia is calculating the benefits of increased adoption to offset its upfront costs. Technology companies often donate the fruits of their research to non-profit organizations with this in mind. Last year, Nokia gave away a low-power wireless technology called Wibree to the Bluetooth consortium.
“This move creates and simplifies a strong development story for Nokia. As each of the platforms vies for supremacy, one of the things each platform is looking for is to maximize the developer story so they can attract a community to the platform,” Gartenberg added.
“Nokia said it expects the acquisition to be completed during the fourth quarter of 2008 and is subject to regulatory approval.”