Nokia to acquire Symbian in $411M deal: Firm looks to counter Linux, Microsoft, others

Nokia Corp. will acquire total ownership of Symbian Ltd., buying out current partners in a deal valued at about $411 million, the company said today.
Nokia said it would combine its own S60 platform with the Symbian platform and provide the results – a single smartphone operating system – without charge to the former owners and other parties joining a new Symbian Foundation, also announced today. According to Nokia, the Symbian OS currently runs on two-thirds of all smartphones worldwide.
The acquisition is seen by analysts as a competitive move to better control development of a single smartphone OS, speed that OS’s time to market and maintain its dominant position among smartphone OSs, thereby meeting the competitive threat from open-source Linux efforts, Apple Inc. and Microsoft Corp., among others.
While the new arrangement to some degree binds former Symbian owners to the platform, many of those companies have already also signed onto other open-source efforts.
Former owners who’ve agreed to the transaction include Motorola Inc., Sony Ericsson Mobile Communications, L.M. Ericsson, Panasonic Mobile Communications and Siemens International.
Members of the new Symbian Foundation include major network operators, handset vendors and semiconductor vendors: AT&T Inc., Vodafone, NTT DoCoMo Inc., Samsung Electronics Co. Ltd., LG Electronics Co. Ltd., Sony Ericsson, Motorola, Texas Instruments Inc. and STMicroelectronics.
Open-source Linux efforts that pose a threat to Symbian and, by extension, to Nokia, include the LiMo Foundation – whose membership includes Vodafone, NTT DoCoMo, Motorola, Samsung, LG, Panasonic and LM Ericsson, which also are members of the new Symbian Foundation – and Google’s Android effort, featuring many of the same players. Meanwhile, Apple’s iPhone is set to launch in 70 countries by next year and Microsoft’s Windows Mobile OS has also gained share in recent years.
In a statement, Nokia’s CEO, Olli-Pekka Kallasvuo, said: “This will drive the development of … Web-enabled applications … We will drive efficient, open innovation by unifying the platform and simplifying the software supply chain … as well as accelerating time to market.”
Gaining leverage
“Nokia likely is doing this to increase its control of the overall platform to stave off competition,” said Mark McKechnie at American Technology Research, in a note to investors. “The royalty-free licensing term seems a fairly easy way for Nokia to try to create a very large installed base of Symbian users to both attract developers and other handset makers to the platform. Nokia wants to be the Microsoft of the smartphone world.”
CCS Insights estimated that Nokia currently spends about $250 million annually to license the Symbian OS from Symbian Ltd., thus the logic of buying the company outright for $411 million and more closely aligning the OS with its efforts in multimedia services.
Analyst Geoff Blaber at CCS Insights said, however, that questions remain about the timing, efficacy and details of today’s announcement.
“Is it too late?” Blaber asked rhetorically in prepared comments today. “It has taken a sharp increase in competition from Google, Apple and the LiMo Foundation to force this move.”
“Can the new entity really be open when Nokia has such a vested interest?” Blaber added. “This may be the stated goal, but in practice it might be more difficult to achieve. We’ll have to scrutinize the fine print of the intellectual property rights and articles of association.”
Nokia may have a new, Linux-based software platform being readied for smartphones, Blaber said.
“It seems almost unthinkable that it would consider open-sourcing Symbian and S60 if it didn’t have something else up its sleeve.”
The fate of Symbian off-shoot UIQ, owned by Sony Ericsson and Motorola, became clearer today when it announced it would layoff 200 of its 375 employees and seek new lines of business. Sony Ericsson and Motorola said today they would contribute UIQ technology to the new effort, while NTT DoCoMo also said it would contribute assets from its Symbian-related MOAP OS.
Nokia’s purchase of Symbian was foreshadowed by the company’s move in 2004 to double its ownership in Symbian by buying out Psion plc’s stake.