|
Nokia and Microsoft in Smart Phone 'War'
From: Redherring
There can be only one
In 1998, Nokia, Ericsson, Motorola, and Psion predicted the boom and formed Symbian, a smart phone operating system developer, then wholly owned by the four hardware manufacturers. (Since then, Panasonic, Samsung, Siemens, and Sony Ericsson have bought additional stakes, and Motorola has sold its stake to Nokia.) By creating Symbian, the companies acknowledged that the mobile phone industry was turning horizontal and only one software company could dominate the smart phone market. They wanted to make sure that company was not Microsoft.
Symbian currently controls 65 percent of the worldwide smart phone operating system market, placing it ahead of PalmSource and Microsoft, which own 16 percent and 10 percent, respectively, according to IDC. (The research firm expects Microsoft to overtake PalmSource this year.) Symbian introduced its operating system in 1998 and has shipped more than 10 million copies of the software on 18 phone models from five licensees. By contrast, Microsoft’s Smartphone operating system has been available only since 2001, but the company has quickly won licensing agreements with such manufacturers as Motorola, Samsung, and HTC. Whether Symbian will maintain its lead is uncertain. “We need to compete with a very well-funded, extremely wealthy organization, and we’ve been extremely successful so far,- says David Levin, Symbian’s CEO.
Symbian has to maintain an independent image with its owners. Because many of its shareholders compete with its licensees in the handset business, Symbian is in a touchy spot, and has to exercise special discretion. Shareholders are not allowed to see any customer-specific information, and antitrust laws require the company to license its software at the same price to all customers. The issue was thrown into bold relief in January, when Nokia proposed to buy Psion’s 31 percent stake in Symbian. If approved by Symbian’s other shareholders - all of whom are entitled to bid for Psion’s shares, too - Nokia would own 63 percent of the company. Still not the 70 percent required to control the company’s board, it is close enough to raise eyebrows.
As a Symbian shareholder, it is in Nokia’s interest to make Symbian’s licensees feel comfortable. 'Nokia needs Symbian to have the perception of independence,” says Ben Wood, an analyst at research firm Gartner. “The day they lose that is the day all other licensees pack up and go elsewhere.” For its part, Nokia says its bid for Psion’s shares is a show of support. -We want to be there guaranteeing that Symbian will not run out of money so it will develop the product further and remain competitive,' says Antti Vasara, vice president of market operations for Nokia Mobile Software.
Horizontal challenges
Damage control has become a fact of life for Nokia, as the mobile-phone industry has grown horizontal. The company has licensed Series 60, its user interface software that runs only on Symbian, to several of its handset competitors, including Siemens and Panasonic. To reassure them, Nokia maintains a Chinese wall between its hardware and software businesses. Card keys belonging to employees in the software division do not open doors to the hardware division, and vice versa. It’s a delicate arrangement the company must maintain as its industry changes around it.
2004 will bring more change - and competition - as U.S. business customers are set to increase tech spending as the economy improves. Microsoft is aiming much of its smart phone marketing at its server software business users, emphasizing smooth interoperability between Windows Mobile phones and Microsoft Exchange email servers. Last October, AT&T Wireless and Motorola introduced the first Windows Mobile smart phone in the U.S., touting the phone’s ability to securely access information behind corporate firewalls.
Nokia is vying for the same customers. In January, the company formed a new division, Enterprise Solutions. The New York-based operation is run by Mary McDowell, a veteran business computing executive formerly of Hewlett-Packard. Nokia has forged a partnership with IBM to offer back-end software, services, and phones to businesses. The companies will compete with Microsoft by offering to integrate a variety of devices and operating systems, not just Windows. 'We want to support all the major device manufacturers, because our software interconnects those devices,- says Don Lopes, director of worldwide business development at IBM Global Services.
Compared to Microsoft, Nokia has limited experience selling to corporate IT departments in the U.S., and it lacks Microsoft’s broad portfolio of business software products. The IBM partnership picks up the slack, yet, “The question,” says Mr. Wood, “is whether Nokia is too late, and should it have set up this strategy two years ago?- The answer will be in Nokia Enterprise Solutions’ revenues, which the company unveils in its financial reports. For now, the new division’s income barely registers on Nokia’s top line. It’s another investment the company is making as it diversifies, and shucks its vertically integrated past.
End of Article
|
