Symbian to Go Open Source, Nokia to Buy Out Symbian Shares
There's more momentum on the mobile open source front. Nokia, Sony Ericsson, Motorola and NTT Docomo announced today that they will unite Symbian OS, S60, UIQ and MOAP(S) into one open mobile software platform. In addition, the Symbian Foundation is now formed, with many prominent early members, including AT&T, LG Electronics, Samsung, STMicroelectronics, Texas Instruments and Vodafone. Nokia will also buy out the remaining shares of Symbian Limited that it doesn't already own, for $410 million. Is Nokia only aiming to stop paying hefty Symbian license fees, or does this point to a promising new open source mobile platform? What does this mean for Linux phones?
As we've previously covered, a wave of mobile phones based on the LiMo Linux-based mobile platform and Google's Android Linux-based mobile platform is expected to arrive later this year. The many partners behind the Symbian Foundation, and definitely Nokia, will have to take these open source platforms seriously as they begin to shake up the pricing models for mobile phones, applications, and operating systems. Symbian currently makes the dominant smartphone operating system, with over 60 percent of the market.
The key here is that the newly formed platform based on Symbian OS, S60, UIQ and MOAP(S) will be available for all Symbian Foundation members under a royalty-free license, from the outset. Many mobile technology manufacturers pay hefty royalty fees for Symbian licenses. In this excellent piece of analysis from CSS Insight, the cost of this is summed up for Nokia alone:
"It was only a matter of time before Nokia bought out its five partners in Symbian. CCS Insight estimates Nokia paid out more than $250 million in Symbian licence fees last year, so it makes commercial sense to buy Symbian for about $410 million, rather than keep paying what is effectively a subsidy to the other shareholders."
CCS Insight's post also points out that "Nokia was more worried about the risk that Symbian’s structure would erode its competitive position." I agree with that, and with CCS' follow-on points about how phones based on the LiMo Foundation's platform and Google's Android will challenge Symbian's stronghold. "Google has challenged the commercial model, stating that its Android platform has reduced the cost of software to 'close to zero,' states the CCS post.
What we're seeing here is very similar to what is happening to portable computing pricing models as Linux and open source software allow manufacturers to deliver solid machines for $300 and $400. Later this year, smartphones with very efficient operating systems and good applications are going to show up in waves, where the costs for phones and services can be brought far below what people are used to paying.
Nokia, Symbian, Sony Ericsson, Motorola, NTT Docomo and many others have to pay close attention to this challenge, and today's announcement looks to be clear evidence that they are doing so. It's not clear yet exactly how open Symbian will become, but this looks like a smart move from players used to raking in profits from proprietary pricing models.
The flip-side of that, of course, is that the Linux-based platforms are going to have to respond to this kind of challenge from an 800-pound gorilla. It is critical for the applications for platforms such as Android to be top-notch and hopefully unique. It will be interesting to watch how the competition plays out in the coming months.For much more on this story, see our sister blog GigaOm's post.