Nokia hits back at Microsoft, Google with Symbian deal

chris

Taking control of the mobile software maker is a bid to stop Microsoft bringing its dominance to phones, analysts say

Nokia's decision to take control of Symbian, the mobile phone software maker, was an audacious move designed to show it is determined not be sidelined in the high-end phone market, analysts said today.

Faced with increased competition by other makers of software for mobile phones, such as Microsoft, as well as Google's new Android platform and Apple's iPhone, Nokia has hit back with the acquisition of Symbian, which provides the software for its most advanced phones.

Yesterday Nokia announced it would pay £209 million to acquire the 52.1 per cent of Symbian it did not already own, buying out Sony Ericsson and Samsung - with which it competes in the handset market - Ericsson, Panasonic, and Siemens.

It is now expected to ramp up investment in the Symbian platform - which has been used by most of the world's largest handset manufacturers to power so-called 'smartphones' - in an attempt to ward off what it sees as a growing threat from Microsoft, whose Windows Mobile software competes with Symbian, as well as new entrants such as Android.

Nokia, which makes about two in every five handsets sold globally, faces threats on several fronts, analysts said. On the one hand, are Apple's iPhone and RIM, the maker of BlackBerry, both of which have strong positions in the market for smartphones, particularly in the US, where Nokia has failed to gain traction.

According to research published earlier in the year, the iPhone now has a 28 per cent share of the US smartphone market - second only behind RIM, which has 41 per cent.

More concerning, however, was the situation in the market for smartphones which did not run on so-called 'proprietary' systems, such as RIM's and Apple's. These phones, including Nokia's, have tended to be powered by either Symbian or Microsoft's Windows Mobile platform.

In the past, both Nokia and its handset manufacturer competitors have produced phones powered by Symbian, but of late the system, particular on high end devices, has been plagued by problems such as slow running speed, analysts said.

In the meantime, Microsoft has invested heavily in its Windows platform, and several manufacturers have opted to use it, instead of Symbian, in their latest handsets - notably HTC, which has adapted Windows Mobile for its new Diamond device, and Sony, which has partnered with Microsoft for its yet to be released Xperia X1 phone.

What Nokia is desperately trying to avoid, analysts said, was a situation where the only genuine 'non-proprietary' operating system for mobile phones was Microsoft's. (Android, which is expected to appear on the first devices at the end of the year, was still in the early stages of development, and did not represent such a threat in the short term, they said.)

"No-one, least of all Nokia, wants to be held to ransom by Microsoft," Richard Edwards, an analyst with Execution in London said. The software giant is understood to charge handset makers as much as $14 for every handset that runs on its Windows Mobile platform.

"Taking control of Symbian and investing heavily in it is a way for Nokia to make sure the system is not marginalised at the high end," Mr Edwards said.

Nokia has said Symbian will become an 'open source' system, which will mean that other handset manufacturers will be free to embed it on their phones without paying a license fee.

While that effectively means the company will be giving away software it owns to its competitors, Nokia is hoping other manufacturers will therefore be more tempted to choose it over Windows and Android.

"Lower costs for the Symbian operating system spell bad news for rivals, such as Windows Mobile and Android," Bonny Joy, an analyst at Strategy Analytics said.

Third party developers should meanwhile be encouraged to write more applications, such as games, for the Symbian platform - much as they are already doing for Android - which in turn should make Symbian phones more compelling for users, analysts said.

"This should definitely help change the perception that Symbian looks old-fashioned alongside other offerings such as Android and the iPhone," Paul Jackson, an analyst at Forrester, said.


Source: timesonline