8 2* years' royalties in advance
Did they jump into the open, or were they pushed?
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.
Bless me, Father, for I have sinned? :-)
"and, in rare cases apply for jobs as press officers to the Labour Party." ... By James Anderson Posted Thursday 26th June 2008 07:11 GMT
Oh dear, as bad as that, eh. The Cabinet Office and the Strategy Unit are no strangers to Virtualisation and Quantum Communications Technology just apparently, blissfully ignorant of ITs Relentless March through Closed Administrations, which invariably are being Systematically Abused. That is a Vulnerability which Renders them Unfit for Future Purpose.
@anon coward 2,4,8,16 royalties ...
>I must be missing something here, but aren't all these years-of-royalty calculations >missing the point that Nokia has payed the 'royalty advance' but still needs to pay the >salaries of all their new Symbian employees? Previously they handed out the cash and >Symbian distributed (much/some of) it to the staff.
I believe Nokia has been looking for good developers, technical architects etc. as they are continuing to grow ... this way they have increased their development team by over 1,000 people without having to do a single interview, read a single CV or pay a recruitment firm ...
... previously Symbian (after starting with big cash injections from all the partners) has been making a profit on royalty payments and so has been paying their own staff, putting cash in the bank and reinvesting in expansion (hiring new people, opening new offices, buying in technology etc.) ... so yes, I expect this will cost Nokia something ... but it's also an investment (as is buying most companies) that Nokia reckons is going to make it money ... I'm sure they think having more developers and a single UI (plus the open source aspects) will mean they will be able to get new phones out quicker/cheaper and with the features people want .. and so they'll sell more phones (or as Nokia seems to ilke calling them "handheld devices/multimedia computers/mobile devices" ... and many of the big handset manufacturers reckon that higher functionality mobile devices (camera/email/web/phone/maybe TV/mp3 player) is the growth area of the market (people who just want "a phone" are paying very little for such, and there's lots of competition, so there's not a lot of profit unless you can sell many many millions of them, as Nokia have done and will probably continue to do with S40) ... but the bigger profit is there in mid-range and feature phones. And that's where the Symbian Foundation OS will come in.
>Or maybe they don't plan on having any new symbian developers, since the delighted >and enthusiastic open source community will be doing all the future work.
Could be! But as the open source isn't coming until 2010, I think Symbian employees will probably have a job until then :-)
>Actually, is there going to be any open source, or just a royalty free platform?
You really need to read other things than just The Register. Symbian Foundation initially will be providing a royalty-free platform for foundation members (currently costs $1,500 to join) and is committed to releasing an open source version (once everything has been combined in and the various IP is sorted out) in, I believe, 2010 ... it's all on the Symbian Foundation website ...
What about Trollech/QT/Qtopia?
I'm surprised no-one has mentioned Trolltech. Where is Nokia's OS/software-platform interest focussed, across the range of their devices? -- i guess perhaps should remember they do make more than just phones -- And how does Qtopia weigh up against Symbian in their looking-to-the-future eyes.
It always seemed to me taht buying up trolltech was an indicator of their interest in pushing out more qt/qtopia handsets.