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 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