The real reason Nokia is purchasing Symbian

By Tsahi Levent-Levi

Categories: Clients

June 26th, 2008

Nokia has announced they are going to purchase Symbian and the same time open source it.

This is a move that is probably going to change (yet again) the landscape of the mobile market. It began with Apple’s iPhone and continued with Google’s Android OS.

Although this move can be attributed to this chain of events, as Ted from Signal to Noise points out, I think it is only the tip of the iceberg. There are other reasons for this move which are as important.

If we split this news into two activities, we can find the reason for each: the purchase of Symbian, and making it open source.

1. Why buy Symbian?

Let’s look at some facts:

• Nokia owns 48% of Symbian.
• Symbian charges an average of $4.1 per phone.
• Nokia will pay around 410 million US Dollars for the 52% additional shares of Symbian.
• 18.5 million handsets sold with Symbian in Q1 2008.
• Nokia held around 53% market share of the whole smart phone market, where Symbian holds 67% of that market.

What does that tell us? That over 75% of the phones that use Symbian are Nokia phones (that will be well over 13 million phones in Q1 2008) - a lot more than Nokia’s piece of the Symbian pie. For an average of $4.1 per phone, they are paying to Symbian over 53 million dollars a year, which is then “distributed” among the various stake holders. In a sense, Nokia has been funding the other Symbian handset vendors it is competing against.

It is no wonder that purchasing the share of Symbian from the other handset vendors is the way to go. That having been said, there is the second piece of the puzzle - open source.

2. Why make it open source?

While Ted attributes the move to open source to Google’s Android OS, it seems that Om Malik places more weight on LiMo, giving them 60% likelihood to succeed while giving Google only 35%. I think there is another important aspect: maintaining an operating system is expensive. VERY expensive. To be able to overcome that, Nokia decided to tap the resources of the open source community - without doing so, taking full ownership of the Symbian OS would have been suicide.

Going open source was also the right move looking at the changing landscape of the mobile handsets. Just last week I have written about the migration from Windows Mobile to Mobile Linux.