Nokia grabs its future with Symbian buy

Planned acquisition will give Nokia greater control over the destiny of its product development.

With the planned acquisition of mobile software maker Symbian, Nokia has decided to grab its future and run with it.

Nokia's decision to acquire the remaining stake in Symbian that it doesn't already own is designed to accelerate the mobile phone giant's product development--and serve as an open-source operating system platform to other handset makers, wireless carriers, software developers, and chipmakers, analysts say.

As a result, Nokia and other industry players hope to create a stronger defense against Apple's popular iPhone, Google's pending Android phone, and Microsoft's mobile operating system, analysts say.

"Nokia realized that under the current structure (where they owned only a minority stake), they could only hope Symbian would unlock their operating system and open it up to developers, handset makers, chipmakers, and carriers," said Jim Kelleher, an analyst with Argus Research.

Nokia and other electronics makers have formed the Symbian Foundation, a nonprofit that aims to create an ecosystem. The foundation is backed by carriers AT&T, Vodafone, and NTT DoCoMo and hardware competitors LG Electronics, Motorola, Samsung Electronics, and Sony Ericsson. Also joining the foundation are STMicroelectronics and Texas Instruments.

"By being a 100 percent owner, Nokia can push the Symbian Foundation initiative forward without the potential of dissenting stakeholders," said James Faucette, an analyst with Pacific Crest Securities. "Nokia wants to attract more development input from other sources and develop a reasonably good alternative to other operating systems that are being developed."

Of course, Nokia is also looking to bolster its own performance with the Symbian acquisition.

"Nokia is trying to accelerate its product development by acquiring Symbian and bringing development in-house," said Mark Sue, an analyst with RBC Capital Markets.

Nokia has seen its worldwide market share steadily erode over the recent quarters from roughly 50 percent of the handset market to around 45 percent, Sue noted.

Three to four years ago, Nokia faced a steep challenge as its competitors launched spiffy, colorful slider cell phones, Kelleher said. Nokia had no such offerings in the works.

"Nokia was guilty of having hardware with no slick, no color. It was just a lump...Nokia was caught short," Kelleher said. "But Nokia has since come back fast and fierce, with new changes to their phones."

He added that the cell phone maker has come to the realization it needs more than just hardware to keep customers interested and up-to-date.

This year, for example, Nokia launched such products as its Xpress Music Phones , the Nokia Tube, in response to Apple's iPhone , and its Prism clamshell phone with triangular buttons .

 

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