June 24, 2008

Nokia To Buy Remainder Of Symbian Shares

Nokia Corp. is buying the remaining $410 million shares of the consortium that makes the software for its phones, Symbian.

Symbian is a UK-based software maker for smartphones and mobile phones.  Their software is used in two-thirds of smartphones and 6 percent of all mobile phones.  To date, more than 200 million Symbian OS based phones have been shipped.

Nokia said Tuesday that it is offering to buy the 52 percent of Symbian that it doesn't already own.  Nokia will then establish a foundation with handset makers Sony Ericsson and Motorola Inc. and Japanese carrier NTT DoCoMo to make the software available royalty-free.  They will combine their three different versions of the Symbian software for advanced, data-enabled phones into one open platform.  AT&T Inc., LG Electronics, Samsung Electronics Co., STMicroelectronics N.V., Texas Instruments Inc. and Vodafone Group PLC will also join the foundation.

"The biggest surprise is that Nokia gets full ownership all at once, and at a good price," said Karri Rinta, analyst at Handelsbanken.

Currently, Symbian's closest rival is Microsoft's Windows Mobile operating system, which has just 13 percent of the market despite the U.S. software maker's effort to gain market share.  Microsoft charges $8 to $15 per phone, while Symbian charges on average $4.10.

"This puts a lot of pressure on Microsoft right at a time when they are trying to really push into the consumer space," said Gartner analyst Carolina Milanesi.

Microsoft is not the only threat to Symbian.  Google Inc. also has plans to release their new software Android for free along with the LiMo foundation.

"It indicates that Nokia is worried by the rise of lower-cost operating systems from Google Android and LiMo Foundation," analyst Neil Mawston from Strategy Analytics said on Tuesday, referring to two rival open source systems.

"But it is also a sign that Nokia has a formidable pricing weapon at its disposal to fend off competitors and maintain its number one global position in smartphones."

LiMo Foundation, which uses Linux software and has members across the industry except Nokia, welcomed the move as creating a structure similar to its own, where software is opened for use to all.

Nokia said it expects the deal, which is accepted by all shareholders except Samsung Electronics, to be completed by the end of this year, and to weigh on earnings in 2009. 

Kai Oistamo, head of Nokia's devices business said he expected the first phones using the open source code to be unveiled shortly after the closing of the transaction, while phones using a completely new platform would reach consumers within the next two years.

"It offers us an opportunity to innovate faster on a bigger, united, more widely accepted platform," Oistamo said.  "It also enables us to deliver new products, we believe, faster to the market."


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