Smartphone wars hot up with Nokia's purchase of Psion - Vendor

Rethink IT, March, 2004

Nokia's decision last month to buy Psion's stake in the Symbian venture shifts the dynamics of the smartphone operating system market radically. This will have many implications for the enterprise as companies increasingly look to mobilize their workforces, using phones rather than PDAs at the front end.

The battle to control that platform is as critical to Microsoft as was its successful bid to take ownership of the PC desktop OS all those years ago. As in the desktop and server worlds, it faces challenges from Linux and also from some established but probably soon-to-be legacy systems, notably PalmOS. And it has to square up to a wholly new and unfamiliar rival, Nokia, now unquestionably the controlling force behind the leading smartphone system, Symbian OS, which aims not just to dominate consumer cellphones but to take the place of Windows on the corporate mobile front end.

In this battle, the key cards are held by the developers. In this sense, Microsoft appears to have a huge advantage in the corporate market, given its massive base of Visual .Net programmers and the familiarity of its user interface to business users. The need to catch up in this area, making Symbian OS attractive and simple for corporate focused apps developers as well as traditional phone software creators, and taking advantage of the growing strength of Symbian's primary language, Java, is a key motivator behind Nokia's decision to take a controlling stake in the Symbian consortium, shattering once and for all any illusion that this was an industry-wide cooperative.

The change of ownership at Symbian--Nokia has bought Psion's 31.1% stake, giving it over 63% of the total--does not make much difference in product terms. The Finnish colossus' stamp was firmly on Symbian's features already. But it is important because it leaves behind any attempt to work through consensus and points to newly stepped-up efforts by Nokia to capture the enterprise front end.

THE NEED TO STRENGTHEN SYMBIAN

Symbian OS is one of the key weapons in the Nokia-Microsoft battle to shape the next generation of technology usage, and it is just too important to Nokia to be left to the hesitancies and internal squabbles of a consortium of relative equals. Nokia and Microsoft will fight to the death in this sector, and to win, Symbian OS needs massive funding, strong developer support and single-minded direction. With Nokia unequivocally in the driving seat, it gains those strengths, though at the expense of the initial dream of an industry-wide consensus technology. The mobile world is just moving too quickly for the luxury of standards.

Antti Vasara, Nokia's vice president of technology sales, said the company wanted to ensure that Symbian had "staying power in an extremely competitive market". The clear implication is that, without a single driver, it would not, especially as Windows Mobile approaches release 3.0, traditionally the one where Microsoft gets enough right to be, not necessarily technologically superior, but at least a default, easy choice.

Symbian is one of the most powerful weapons against that outcome, but it has been hampered through its whole life by the committee approach of its ownership--witness its painful first few years and early specifications. Ever since Motorola sold its own stake in Symbian to Nokia and Psion last September, it has been clear that the Finnish company could not carry on with the status quo. Motorola's exit made Nokia the largest shareholder for the first time, sharrering any illusion that Symbian was a partnership of equals. By not only selling its Symbian share but also adopting Windows Mobile, Motorola also made Microsoft a more viable competitor to Symbian, putting pressure on Nokia to make a clear response to the threat and to decide whether this would rest on developing the OS through consensus and using its market power to drive uptake; or on bidding for greater control.

The decision is clear from this .week's news. Whether it is a good one is less clear. There are many negatives to it, primarily that, whatever the realities of the Symbian structure, it will now be perceived as a Nokia technology. Ironically, that is more likely to damage Symbian with the Nokia-suspicious operators than with Nokia's own handset rivals, as we will explore later. But this was probably the only realistic decision, not ideal but essential. Motorola had already dealt a body blow to Symbian's original remit--impossible to pose as an industry-wide alliance without the support of the world's number two handset maker. Having lost that role, it now needs to pursue its other goal, to achieve market dominance.

DEVELOPER RELATIONS--VISUAL .NET VERSUS SERIES 60

The success or otherwise of that will depend on three groups--the other Symbian licensees, the major operators, and the developers. In our view, it is the third group that has swayed Nokia's decision on Symbian. It is arguably the most critical of the three in the Symbian-Windows battle and is the only one where the Nokia-backed technology has a clear disadvantage, especially in the business market that Nokia so dearly wants to own.