Once More unto the Breach

Nokia and the Symbian Foundation Opportunity - Part II

The previous post looked at the Nokia acquisition of Symbian from the competitive perspective. Let's now look at the opportunities and challenges for Nokia and the new Symbian Foundation. Remember that assuming successful regulatory approval, there will be no Symbian Ltd. anymore. Nokia will need to manage the challenges that come with any acquisition. When you buy a company, you essentially acquire the assets (in this case the software), the intellectual capital of the employees, and the customers.

This acquisition is particularly interesting as key Symbian Ltd. shareholders and customers have banded together to deliver the primary software assets into a not-for-profit organization. There's a great white paper outlining the initial strategy on the currently minimalist Symbian Foundation site.

Essentially:

• Nokia will acquire the remaining shares of Symbian Ltd. that it doesn't already own.
• Symbian Ltd. employees become Nokia employees.
• Fujitsu, Motorola, Nokia, NTT DOCOMO, and Sony Ericsson (all Symbian Foundation board members with the exception of Fujitsu) will contribute SymbianOS, S60, UIQ, MOAP and related software and documentation assets to the newly formed foundation.
• The initial board directors will be AT&T, LG, Motorola, Nokia, NTT DOCOMO, Samsung Electronics, Sony Ericsson, STMicroelectronics, Texas Instruments and Vodafone.
• The foundation launches (expected in early 2009) and all the assets will be available to members under a royalty-free license.
• A new platform will be developed from SymbianOS and S60 with selected components of UIQ and MOAP. The first release of the unified Symbian Foundation platform is expected to be available during 2009. The platform will offer the means to build a complete mobile device while providing the tools to differentiate devices through tailoring of the user experience, applications and services.
• The new platform is to be backwards compatible with SymbianOS v9 and S60 3rd Edition.
• Platform assets will be made available as open source gradually over the next 2 years, with the intent to use the Eclipse Public License (EPL) 1.0, making the platform code available to all for free.

Most of this is fantastic news. The economics of code sharing, value preservation of the intellectual asset, and innovation capture will be delivered through the foundation with the primary stakeholders sharing the costs. This is a perfect example of the economics of shared development in this particular market space and "why open source software."

Organization and governance of the new Foundation will be key. The foundation is open to all and membership will cost US$1500. The primary board members will share all the operational costs. This seems a reasonable way to manage the cost — it's likely much cheaper than historical royalty payments and it scales well versus a fixed premium membership fee structure seen in other places. The white paper describes the functioning of the foundation based on the following structure.

As a side observation, it would behoove Intel to get involved early on, conceivably as a primary board member and share the costs. As the mobile world of phones and laptops converge, they should be investing beyond moblin.org. That is NOT to say that the mobile world will be a single class of devices in the future, but rather the space will overlap for some time and I would think Intel would want to participate as widely as possible.

So where are the edges that need to be carefully considered in the new Symbian Foundation?

• While the foundation is open to all, and the list of membership benefits is well defined today (in the white paper), one of the benefits reads: Right to access and modify foundation source code, and contribute code to the foundation. This needs to be rethought along the lines of how the Eclipse Foundation manages committers and contributors. The Symbian Foundation is deliberately cutting off unknown sources of contribution if they make it a membership benefit. There is no loss of control in encouraging (and vetting) contributions from as wide a population as possible. Putting gates around the community early, or discouraging contributors looks arrogant and risks the community's participation and growth at precisely the time when it is most needed. Microsoft certainly demonstrated how fast you could pour cold water on a community with the Rotor project. Motorola had its early Linux community vanish. Heavy-handed control and "we know best" attitudes hampered the early critical growth of the OpenSolaris community. Who knows what sources of innovation will be cut off (and will defect to other projects) with this gate in place.
• "Backwards compatibility" as an absolute goal. This is not a bad thing per se, but it feels like the backwards compatibility requirement exists to deal with a long delivery cycle — essentially asking developers to begin developing today for the open source platform delivery in two years and the promise that the investment will be protected. All complex dynamic software hits a point in its evolution where a re-write is required. (The Linux kernel rewrote the entire VM and scheduler after about 10 years of evolution with modern architectures.) Backwards compatibility becomes the challenge. But the opportunity forward MUST be bigger than the backwards compatibility option. It needs to be managed in the community, i.e. this is a community issue and a delivery time-line issue. Think of the opportunity that Microsoft took moving from the Windows world of the late nineties to the new world enabled by NT. Think of the enormous opportunity Apple took moving from Mac OS9 to Mac OSX. Think of developing a community of innovation forward like the Mozilla world and Eclipse.
• The whole two-year process feels like a traditional corporate engineering culture trying to manage change around a well established product space. This would be great if this was what Symbian Ltd. was to remain (but even then it risks being a dead-end overtaken by other solutions with the coming mobile Internet wave). When IBM began the Eclipse Project, they put safe IP structures around a software base, some simple governance and a road map in place, and got on with the work. Later, the Eclipse Foundation was created as a better way to manage the inbound innovation and growth under a well defined IP regime. Now, the Eclipse Foundation and Mozilla Corp. provide excellent blueprints for what the Symbian Foundation needs to be. Nokia already has the inhouse experience to build from those blueprints. Engineering cultural change is difficult but essential here. While one wouldn't expect Symbian Ltd. to release its core assets while awaiting regulatory approval, there have to be other complementary software assets internally available that could be released as early experiments to begin to get the IT structure in place and begin the cultural learning. Two years gives Android and LiMo and even Windows Mobile too much time to erode a community that should rightly be coming to the Symbian Foundation.

These are all key issues. Cultural change is hard in any acquisition. In this case it is doubly so for an engineering team used to delivering to a particular set of customer requirements now dropped into an open source world and needing to understand how open source works and customers and users differ, as well as for a business team used to driving platform revenue and profitability that need to consider now driving platform adoption as an end goal unto itself.

The Symbian Foundation is an opportunity not to simply re-invent the mobile phone platform, but to build the most innovative shared platform forward for the coming mobile Internet. Working with peer organizations like the Eclipse and Mozilla foundations, and arguably the Android project, a stable dynamic open source platform can be created that best suits the needs of customers and consumers for some time to come. Nokia's vision and foresight open up amazing possibilities. Here's wishing them speedy success.

Nokia and the Symbian Foundation Opportunity - Part I

Sixty days ago, Nokia announced it was buying the rest of Symbian Corp., and would then open source SymbianOS using the Eclipse Public License through a newly created Symbian Foundation. This is a great announcement. Stephen O'Grady did an excellent Redmonk Q&A analysis at the time. Nat Torkington also had cogent analysis on what it may mean with respect to Android. There was lots of other commentary, however, that wanted to portray this as a last ditch effort against Android, Linux and LiMo, and the coming wave of the iPhone. Let's step back for a moment.

This is a fantastic exit for Symbian. They're celebrating their 10th anniversary at the peak of their game with enormous market share, but there was going to be trouble on the horizon. If you saw the Symbian presentations of a couple of years ago, they all looked to China, India, and the other developing economies and assumed a proportionate claim of market share. But here's the rub — when you start talking a few dollars royalty per handset then royalties quickly fall into the billions of dollars when you consider "handsets for [India | China]". For a billion dollars, I can start thinking about other alternative operating systems and indeed that's what Symbian's primary shareholders began doing.

Motorola delivered the Ming phone into China on a cut-down Linux base. This was almost a year before the iPhone "happened" and for the Chinese market was arguably a much more useful "phone". (Full stylus input for Chinese characters — think about that and texting.) The Ming was the first 2MP pixel camera (with business-card-to-contacts-database software that worked with the camera), a media player, and came in a sleek package. This was likely just the beginning of the shift away from SymbianOS in emerging markets, especially considering there are Chinese companies working on cut-down Linux-for-mobile platforms as well.

The announcement was a great acquisition for Nokia. For on the order of two years of royalty payments to Symbian, they now own the whole asset, regardless of whether they share it. But Nokia too was considering how to best work in the open source community and using Linux as a base for around the N770/N800 series Internet tablets.

Let's look at the competitive landscape for a moment before looking at the enormous opportunity in front of Nokia and the Symbian Foundation.

The "Competitors"
The iPhone isn't competition for SymbianOS. The iPhone, true to Apple's history of profitability over market share and its cult of design and usability, is an amazing consumer experience. The complete Apple experience depends upon controlling the entire technology stack in a tightly integrated fashion. In Christensen economic models, the iPhone is a new class of product and will deliver more value to its customer target over the coming years through tight control and integration than can be delivered through standardized interfaces and components, and Apple will reap the margin benefits. That same focus on function and design also means Apple will never own 65% of the global market — it won't be producing $25 iPhones for Africa anytime soon. What Apple has demonstrated to the mobile industry with the iPhone is what the mobile web experience can be. They may have "only" sold a couple million units in their first year, but they are driving 65% of the web's mobile traffic on iPhones/iTouch devices (stat from Jason Grigsby's excellent OSCON presentation). The iPhone is an innovation example for Symbian, not a competitive threat.

Google's Android is interesting. Google wants to drive application development with Android that uses Google services to find ways to grow their ad revenue as the mobile web comes into its own. They are discovering the difficulties of delivering a handset OS — something around which the Symbian engineering team has a lot of experience. Since Google isn't actually a device company, this feels like an opportunity for each of them to explore their complementary spaces. Google application services running on a Symbian base would seem to be a win for Google and application developers trying to settle on a model while allowing Symbian to do what it does best and focus on developing a strong developer community. Since the Symbian Foundation will not be under a market competitive revenue gun, profit-centric competitive decisions are removed that might have historically put co-operating with Google at risk. Android should be an opportunity, and not a competitive threat.

LiMo was created to provide a common Linux fork for mobile. The mobile handset manufacturers have shared technology through Symbian Inc. for ten years. As the industry changed and the royalty became a problem, they all wrestled with Linux. They need a royalty free OS, but trying to integrate into the Linux community has been a source of frustration for quite some time. Things that are critically important to handset manufacturers aren't necessarily even interesting to the mainstream Linux community. Each handset manufacturer was forced to fork their own. Before Android (a company-centric platform from a non-device company) and before Symbian became open source, LiMo was likely the best opportunity for a shared royalty-free platform. The most damning thing for LiMo pre-Symbian was probably Nokia's proven ability to work in the open source community to develop the N770 without a fork. The Symbian Foundation use of the Eclipse Public License will also likely make handset manufacturers much more comfortable — the EPL IBM-lineage ensured that the hardware patent clause was still intact. So LiMo is not a competitive threat for Symbian, but the reverse is not so true.

Windows Mobile is not interesting. Microsoft has seen mobile computing coming for sometime, but there are several problems. First there's the royalty problem. Second there's the open source culture versus IP protection problem, both internally and from an external partner perspective. Lastly, there's a very subtle cultural problem. In the early days of mainframes and minicomputers, users thought in terms of a data record/transaction metaphor. The PC introduced users to a document metaphor for computing. The mobile phone space uses a communications metaphor. Microsoft thinks of the mobile phone space as a small powerful PC used to read Word documents to drive data revenues for the mobile network operators, and that's not the sort of mindset the handset manufacturers have. (Another startling statistic from Jason Grigsby's excellent OSCON presentation: 2007 SMS revenues were $100B, which is more than the Hollywood box office, DVD sales and rentals, the music industry, and video game sales combined.) So while Windows Mobile was interesting in a pre-Symbian Foundation world, it still only had a quarter of the deployment of SymbianOS, and now Symbian will be royalty free. So Windows Mobile is not a competitive threat for Symbian, but the new Symbian Foundation done right will definitely threaten Windows Mobile.

It was interesting to see almost no discussion over the past couple of months around Ubuntu Mobile Internet Device (MID) Edition or Intel's Mobile Linux project (moblin.org). Each of them are carefully not targeting the mobile phone space but are forward looking to "the mobile internet" using in-vehicle devices and netbooks as their examples. It will be interesting to see how this space evolves as the mobile phone grows up into the space, and the laptop/notebook space shrinks down.

Next we'll look at the opportunity in front of the Symbian Foundation: Nokia and the Symbian Foundation Opportunity - Part II