Nokia's Newest Subsidiary

by: Joel West December 03, 2008 | about stocks: NOK    

Joel West

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Largely lost in the announcements at Nokia World was this press release:

Nokia acquires Symbian Limited
December 02, 2008

Espoo, Finland - Nokia (NOK) today announced that it has completed its offer to acquire Symbian Limited. All conditions to Nokia's offer to acquire Symbian Limited have been satisfied and it has received valid acceptance of greater than 99.9% of the total Symbian shares that Nokia did not already own. Symbian is the software company that develops and licenses Symbian OS, the market-leading open operating system for mobile devices.

The closing of the offer is a fundamental step in the establishment of the Symbian Foundation, announced on June 24, 2008 by Nokia, together with AT&T (T), LG Electronics (LGERF.PK), Motorola (MOT), NTT DOCOMO (DCM), Samsung (SSDIF.PK), Sony Ericsson (SNE), ST-NXP Wireless, Texas Instruments (TXN) and Vodafone (VOD). More information about the planned foundation can be found at www.symbianfoundation.org.

All Symbian employees are planned to become Nokia employees on February 1, 2009.

After 10 years, Symbian is gone as an independent company. Although the acquisition marks an important milestone to the plan announced June 24, the more important milestone will be (as noted) when the employees get all shuffled around and dispersed to Nokia divisions after Feb. 1. The bulk of today’s Symbian Ltd. — software engineers and associated QA and management — will presumably end up somewhere within handset R&D.

One major unknown (and for now unknowable) is how loyal Symbian handset makers (beyond Nokia) remain. Nokia’s always had a difficult time balancing its internal goals against attracting competitors to share an ecosystem. There have also been a series of one-off problems that seemed to jinx the other participants: Motorola’s ongoing saga, Sony Ericsson’s withdrawal from much of the world, and the emphasis of the Korean vendors on cool hardware rather than usable software.

Something that will be resolved sooner is the nature of the Symbian Foundation. The most successful multi-firm open source consortium is the Eclipse Foundation, which lists 17 names on its staff page. This would be a small fraction of the “few hundreds” planned for the Symbian Foundation as mentioned in a June interview.

At Nokia World, Symbian Foundation executive director (designate) Lee Williams gave one of the keynotes. Williams was the obvious candidate, as a member of the (former) Symbian board and the outgoing head of Nokia’s S60 software development (a distinction that will go away once S60 and Symbian are merged). He also had experience as a manager at Be Inc. (the Apple (AAPL) spinoff) before and after it was acquired by Palm (PALM).

Alas, the first 15 minutes of the talk was exceedingly platitudinous, as executives seem wont to do with a large captive audience.

The useful part of the talk was the last eight minutes, beginning with the phrase "In terms of the goals of the foundation at a very concrete and practical level …” The basic message (in R&D speak rather then MBA speak) is that Symbian OS will leverage its economies of scale and scope to maintain its lead over all rivals. He emphasized three major goals:

  • A complete platform in 2009, and with it a more compete platform — in terms of devices, third party applications and platform maturity — than any rival.
  • Hardware agnostic. 7 chipsets, 5 baseband modems, plus other chipsets and components
  • “A real ecosystem” of a wide range of firms, small and large, with no one party advantaged

Obviously paying the Symbian engineers to keep updating the OS will work as long as Nokia pays the bills, and there should be some great improvements of efficiency and effectiveness after Nokia removes the Symbian/S60 schism.

The long term question is outside participation and financial support for the Foundation outside Espoo. In theory, open source should attract third party participation but in practice it rarely works that way: when a single firm sponsors an open source community, usually other firms choose not to participate due to a lack of accessibility. The IP may be open but the production and/or governance are not.

IBM (IBM) gained outside supporters when it created Eclipse. It also created the open source Eclipse Project, but today that remains unique. Symbian was already fairly open — certainly as open as many standard consortia — and for now it’s not clear whether Nokia-owned, (with a smaller open source foundation) will be more open (in governance) than the previous arrangement.

Disclosure: Joel West is a consultant to Symbian Research, but the views expressed are his own.

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