| Guest opinion: Symbian + Nokia = Love |
Andreas Constantinou (Jun. 26, 2008)
Foreword -- This detailed, fact-filled editorial lays out the facts surrounding Nokia's announced intention to buy out its partners and release Symbian to open source. Author Andreas Constantinou, one of the smartest new voices commenting on the wireless market, then looks at what the news really means for the industry. Enjoy . . . !
Symbian + Nokia = Love
by Andreas Constantinou
On June 24, Nokia celebrated Symbian's 10th year anniversary with a bang; an acquisition of the company, a merging of the Symbian OS with the S60 codebase, and the declaration of an open source roadmap. In this article we summarize the facts of the story, and analyze the far-reaching repercussions in the industry.
Symbian is definitely the most succesful operating system for smartphones to date; it has shipped on 200 million devices across 235 models from all top-5 OEMs, and amassed an ecosystem of four million developers. Exactly 10 years following its launch, Symbian is now undergoing a major transformation process with far-reaching consequences for the entire mobile industry.
The facts behind the Symbian+Nokia love affair
Let's look at the facts that were announced on June 24th:- Nokia is to acquire Symbian Limited with closure expected by the end of 2008, subject to regulatory approval. On closure, all Symbian employees will become Nokia employees.
- Nokia will be spending EUR 264 million to buy the remaining 52 percent of Symbian shares from Sony Ericsson, Ericsson, Panasonic, Siemens and most likely Samsung. Note that this is about 2.5 times what Nokia paid to acquire Trolltech, and about 20 times less than what it paid to acquire Navteq.
Symbian makes about GBP177 million a year (calculated as 7 percent increase over 2006 revenues, in line with 1H07 year-on-year growth). That means that in Nokia's share offer, Symbian was only valued at just over two times its annual revenues. ARCchart has an analysis of how Symbian's valuation has remained pretty much constant of the last 5 years, despite have shipped its OS on 200 million devices.
- Symbian OS will be merged with S60 in 1H09. Sony Ericsson and Motorola intend to contribute technology from UIQ, while DoCoMo intends to contribute MOAP-S assets (the Symbian flavor of a Japanese application platform).
- The Symbian Foundation will own the roadmap and development of the Symbian+S60 OS. The foundation will be formed in 1H09 from Nokia and founding members OEMs (Fujitsu, LG, motorola, Samsung, Sony Ericsson), network operators (AT&T, DoCoMo, Orange, T-Mobile, Vodafone), hardware platform and chipset vendors (Broadcom, Ericsson, Freescale, ST, Texas Instruments), system integrators (Digia, Teleca, Wipro), content providers (EA Mobile) and software vendors (PlusMo).
- The Symbian Foundation platform will be available on a royalty-free license to all foundation members, starting in 2H09. The platform will be completed in 1H10.
- Platform assets will be available under an open source license gradually over the next 2 years, with the intent to use the Eclipse Public License (EPL) 1.0. EPL is a weak copyleft license, which means that source code modifications and derivatives created must be published if distributed, but can be combined with proprietary software. There is also an explicit patent grant in the EPL, which implies that IPR-encumbered code (intellectual property rights) from third parties is unlikely to find its way into the Symbian Foundation platform.
- The Foundation will operate as a meritocracy. Device manufacturers will be eligible for seats based on the number of Symbian Foundation platform-based devices shipped, with the other board members selected by election and contribution.
- The Foundation will provide a single point of access for developer support, offering SDKs, documentation, samples, knowledge base, application signing and tech support.
- The Symbian Foundation platform will be backwards compatible with Symbian OS 9, S60 3rd Edition. Note that this backwards compatibility warranty isn't offered by either Android (which may suffer from fragmentation by design) or by LiMo (which effectively standardizes middleware and kernel, less so the application environment)
- The Foundation will be open to all interested parties on a low $1,500 yearly fee from 1H09. Being a Foundation member gives you rights to access, modify, and contribute Foundation source code, access meeting minutes and documents, participate in working groups and annual member meetings.
What this means for the industry
So what does this mean for the mobile industry? The repercussions of this announcement are rather disruptive:- Nokia will increase its control over Symbian, not only through ownership, but also through the governance model of the Symbian Foundation. Previously Nokia was shipping around 70 percent of Symbian-based devices, but only had just under 50 percent of ownership. Share of shipments and control of the OS (through board seats) are now aligned.
- This is a logical move for Symbian, which was crippled without control of the UI, application stack, and the core OS under the same entity.
- The current Symbian OS license will be extremely simplified into EPL, a popular weak copyleft license that's been tried and tested across 10s of commercial projects by the Eclipse Foundation.
- Sony Ericsson and Motorola (whatever its fate is) will be eventually adopting S60 and dropping UIQ. That's a major change, especially for Sony Ericsson, who had built 6+ current phone models on UIQ. UIQ will be initially laying off 200 out of 375 staff, according to Reuters.
- DoCoMo should be replacing MOAP with S60, again a major undertaking for Fujitsu, Sharp, and Mitsubishi, who had shipped over 60 models to date on MOAP.
- Unlike LiMo, the Symbian Foundation will be controlled by a single player, Nokia, based on its ownership of Symbian and the shipment-based assignment of board seats. This governance model is effectively similar to the Open Handset Alliance, which is controlled by Google, and the WebKit browser core development, which is owned by Apple (although the underlying mechanisms are quite different in each case).
- Windows Mobile is the only licensable OS for mid/high-end phones which doesn't have a consortium-based contribution model and an open-source-like license (apart from selected parts of the Windows CE source code which are under varying Shared Source licenses). I would expect Microsoft to react in the next quarter by open sourcing more of Windows Mobile.
- If Android signaled the commoditization of the mobile operating system business, the Symbian Foundation platform is the nail in the coffin. This will make things challenging for many Linux stack vendors (especially those targeting the smartphone market) who charge on a royalty basis. I would expect to see revenue models slowly migrate towards professional services fees from certification, customization, and productization. (see earlier VisionMobile analysis of open source business models).
What triggered the disruption
The announcement surprised almost everyone in the mobile industry. It was hard to predict, but is not too hard to rationalize. It may be argued that there are two reasons for Nokia's acquisition and open source roadmap:- Firstly, as a royalty-free, open source licensed OS, Android was too hard to resist for any OEM. Nokia's acquisition of Symbian is essentially the answer to Android, resonating the same core principles, which are
- royalty-free
- open source licensing for pooling costs of maintaining a commoditizing OS
- majority ownership by a single player
- Secondly, Motorola was bleeding heavily in a financial sense, and so it would have been keen to sell out its UIQ shares, which Sony Ericsson could not assume the burden of, as UIQ was a long way from being profitable. With UIQ out, S60 was the only Symbian-based alternative for Sony Ericsson, and a strategic choice in keeping Google from becoming the "Android-inside" of the mobile industry.
First reactions
The Nokia+Symbian disruption is now creating three centres of gravity around licensable mobile software: LiMo, Android, and the Symbian Foundation (one could also add Qualcomm BREW for specific markets). Besides layoffs at UIQ, the repercussions to the industry will be far-reaching, but the full story will take time to unravel. After all, the first Symbian Foundation devices are not expected until 2010.
Interesting times indeed!
 About the author -- Andreas Constantinou is research director of VisionMobile. Andreas has nine years experience in research, development, and strategy in wireless. He leads the analyst team at VisionMobile, providing market-how maps, 360 degree workshops, and research reports. Andreas specializes in mapping the mobile vendor taxonomy, advising software vendors on strategy, and tracking under-the-radar industry trends. Andreas holds a Ph.D. in image and video compression from the University of Bristol, UK.
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