Nokia’s decision to buy and then set free the Symbian platform
shows where the smartphone industry is headed

Smartphones have become one of the “cool” electronic devices to have. Witness the frenzy surrounding Apple’s iPhone. But does anyone other than a geek care what makes these devices smart, or is their cachet based on what they are able to do?

Research done recently by Bill Hughes, an analyst with In-Stat, showed U.S. consumers thought smartphones were the most important mobile productivity device they could have. They ranked smartphones above the ultra-mobile PC, mobile Internet devices and smartphones combined with a mobile companion.

Smartphones have been the fastest-growing segment of handset sales globally, with that trend continuing well into the future. ABI Research has said 10% of the 1.12 billion mobile phones sold last year were smartphones and forecast one-third of the handsets sold in 2013 will be “smart.”

It’s the operating system in these handsets that make them smart. But, as smartphones become more widespread, what makes them smart is becoming less important. That may sound counterintuitive, but that’s one of the reasons Nokia decided to buy all of Symbian Ltd. for about $410 million and then donate the source code to a new Symbian Foundation, which will in turn provide the code free to its members and developers. Sony Ericsson and Motorola, which jointly own UIQ, are joining the foundation and contributing UIQ’s technology. NTT DoCoMo also is contributing its MOAP interface.

FREEING SYMBIAN
Essentially, Nokia is making the Symbian OS and its own S60 UI software an open-source platform, just as mobile Linux becomes a bigger player in the smartphone world. The Android OS, backed by Google and the Open Handset Alliance, is based on Linux. The LiMo Foundation also just merged with the Linux Phone Standards (LiPS) Forum, cutting down on Linux fragmentation. Palm also has been working on a new operating system based on Linux.

Why would Nokia make the world’s leading smartphone OS free to developers and handset manufacturers? Symbian has about 60% market share, with Linux, RIM’s BlackBerry and Microsoft Windows Mobile in a virtual 3-way tie for second. Apple’s iPhone has been making in-roads.

There are a number of reasons Nokia decided to free up Symbian, but underlying them all is that all handset OSs are becoming less important. Instead, handset OEMs see services, applications and differentiated user interfaces as their future.

McDowell: Symbian’s new status will encourage innovation by developers.

Mary McDowell, executive vice president and chief development officer for Nokia, said as much in an interview. “It is time for us to get out of the plumbing business and focus on the value-add,” she said. “We see from a market standpoint that we need more focus on higher levels. What you’re seeing is a transition away from manufacturers focusing on the bowels of the device and more on distinctive user experiences.”

Operators also have been pushing for fewer handset OSs, McDowell said. Among these is Vodafone, which has targeted Symbian, Linux, Windows Mobile and RIM.

She also said moving Symbian to a royalty-free, open-source model will encourage more innovation by developers. Plus, she said Symbian has the advantage of being a 10-year-old platform with 4 million current developers and is being used by 7 OEMs already. As Symbian moves forward as open-source, all its legacy will move forward as well.

Besides Nokia, Sony Ericsson, Motorola and DoCoMo, initial members of the Symbian Foundation will be AT&T, LG Electronics, Samsung Electronics, STMicroelectronics., Texas Instruments and Vodafone. Membership, available with a $1,500 annual fee, may be expanded.

John Jackson, an analyst with the Yankee Group, said it was logical for Nokia to free Symbian because the move will attract innovation to the platform while allowing the Finnish company to differentiate its handsets on the basis of services like its Ovi platform.

COMPETITION
Other handset OEMs using Symbian will have one less headache to think about because of a proven, stable and mature underlying platform and a healthy range of user interface (UI) options, Jackson said.

“It’s long been tacitly acknowledged that Nokia’s invisible tail wagged the Symbian dog,” Jackson said. “No insider will deny this over a few beers, and it hasn’t necessarily been a bad thing. It is ironic that Symbian may finally be de-politicized as a wholly-owned unit of Nokia.”

Symbian still will have to disassociate itself from Nokia, the analyst said, but by making it open-source, “all of a sudden, Android looks much less interesting. Why would a vendor spend the hundreds of millions necessary to port/integrate a roadmap to an unknown stack or/or ecosystem, notwithstanding Google is somewhere behind the curtain?”

Google, for its part, welcomed Nokia’s move.

“Google has been a strong believer that openness fosters innovations, benefiting consumers,” a Google spokesperson said. “That’s why we’ve formed the Open Handset Alliance to develop and open source the Android platform. We’re very pleased to see other major players in the mobile industry moving in this direction.”

OS breakdown.

In-Stat’s Hughes thinks the Symbian Foundation “is a shot across Google’s bow.” He said developers will take a look at the OS landscape and see Symbian as a proven platform with a large installed base. He said handset manufacturers might also back away from Android, although it is backed not only by Google but by OEMs like Motorola, LG and Samsung and operators like China Mobile, DoCoMo, Sprint Nextel, T-Mobile, Telecom Italia and Telefonica.

Some analysts also said Symbian’s new status also will hurt Windows Mobile, which Microsoft licenses to OEMs for a reported $8 to $15 per handset (Symbian reportedly charged $4.10. Neither figure could be verified at prss time.)

Scott Rockfeld, group product manager for Microsoft’s Mobile Communications business unit, said Microsoft still believes its approach is best because an open-source model creates fragmentation that ultimately hurts developers.

Microsoft licenses the Windows Mobile application programming interface (API) to developers on a royalty-free basis and also works with handset OEMs and carriers to help them differentiate their offerings, Rockfeld said. “What this does is create a consistent approach,” he said, adding there have been more than 3 million Windows Mobile system developers kits downloaded.

Open-source leads to security risks as well as fragmentation, Rockfeld said. The model means each OEM and operator has its own differentiation, forcing developers to write to each differentiated offer, he said, while operators can’t be certain the platform is secure.

Rockfeld discounted Symbian’s plans to offer a free platform, saying it will be “free like a puppy. Once you take the puppy home, you have to do a lot to get it into the world. Ultimately, the total cost of delivery is what is paid to get it to the customer.”

Windows Mobile sold 11 million licenses in 2007, equivalent to 11 million handsets, and expects to have 20 million licenses in 2008, Rockfeld said. The platform is used by 50 manufacturers and 160 operators in 98 countries.

Microsoft also continues to believe that Android will have difficulty penetrating the market because it started from scratch last year, Rockfeld said, adding that Google and its OHA partners are discovering it is challenging to build a phone from the ground up. Google has said Android phones will be available by the end of the year.

Yankee Group’s Jackson said Symbian’s open-source move is a validation of mobile Linux, though, and that some Windows Mobile licensees might be enticed to Symbian because of the open-source model.

Morgan Gillis, executive director of LiMo, said Symbian’s move is a “natural evolution” because the future of the handset OS is not about the technology but about a non-commercial business model.

“LiMo welcomes the formation of Symbian Foundation and we are happy that it follows the pioneering direction and vision of LiMo Foundation,” Gillis said. “Openness in governance and development will help the industry coalesce on a much smaller number of handset OSs so that investment and innovation can be unblocked and far better proposition brought to consumers.”

It also means there will be less clamoring about OSs and more attention to what smartphones can do.