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Nokia pays 8 2* years' royalties in advance

Did they jump into the open, or were they pushed?

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Nokia has paid €264m for outright ownership of Symbian, which sounds like a lot until you realise that's about what the Finnish giant will owe in royalty payments over the next 8 2* years, so the question becomes not why they bought Symbian, but why they are letting everyone else share the goodies.

It's hard to make money making mobile phones: the margins are very tight and outside of top-end smart phones the business is very price sensitive. Most of the industry has long assumed that cheap, far-eastern, labour would end up making handsets, and that Nokia would push into software, ideally licensing the platform in much the same way as Microsoft does.

And that seemed to be happening, though admittedly more slowly than anticipated as Symbian's push into mid-range handsets stalled. UIQ was maintained as a token competition (MOAP(S) is more of a vertical niche), confusing the market and allowing Nokia to slip into a software-supplier role and (eventually) to stop competing with its customers.

At first glance the fact that the Symbian Foundation is planning to give away its software might belie that, though analyst James Brown from Frost & Sullivan believes the plan might yet have legs: "This is seen as a strategic move to stave off competition ... and position Nokia as more than a Mobile Phone Company. Nokia will now own relationships with all of the big five handset manufacturers and a tremendous developer ecosystem".

Last year Symbian made just under €48m in royalty payments. If we (conservatively) assume that two thirds of Symbian handsets are Nokia's then the company is paying €32m a year in royalties to Symbian. As Matt Lewis research director at ARC Chart puts it: "They're buying ownership of the company, they no longer need to pay for the Symbian licence ... forever."

But the fact that Nokia was so closely tied to Symbian was already making the competition uncomfortable, and outright ownership isn't going to help that. So by throwing the whole bundle into open source Nokia is attempting to allay those fears, though at a cost of their own revenue.

The question of how Nokia is going to make money was asked directly at the press conference, and it was explained that the deal would lead to Nokia selling more products - a reference hastily amended to "phones" to remind the assembled that they are still a mobile-phone company.

Except that Nokia has swallowed the Web 2.0 red pill, and parts of the company see themselves as a provider of cloud services with no need for owning an OS, creating a graphical layer or even making handsets. So the new Nokia doesn't need revenue from software licences and the competition doesn't want to licence a Nokia-owned platform - so will they take it for free?

My esteemed colleague, Andrew Orlowski, sees the end of the Symbian dream, as companies shy away from a Nokia-controlled entity, regardless of promises of eventual independence [no I don't - Andrew]. All the Symbian employees will be Nokia employees; adding the word "foundation" does not make a body independent.

Andrew may have been at the launch of Symbian 10 years ago, but I wrote my first EPOC code more than 20 years ago (Top Speed anyone?), and I believe more manufacturers will embrace a platform with proven ability and utility as well as a significant back-catalogue of applications, especially once it's free.

Programming Symbian might be something of a black art, but availability of applications has never sold handsets (if it did we'd all be using Palm OS) and the Symbian platform is sufficiently flexible for the few applications people actually want to use as well as allowing enhancements when technology moves on.

Symbian, open source or otherwise, will continue to be a significant player in the mobile phone business. Today's announcement will only increase its market share, but how that leads to greater revenue for Nokia is another matter entirely. So the question becomes if the Symbian Foundation could survive the demise (or radical restructuring) of its overbearing parent. ®

* Eagle-eyed readers have noticed that the Symbian-royalty figure used is for the last quarter, not the year, so Nokia actually snapped up Symbian for 8 quarters of royalty: 2 years rather than 8.

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