Top mobile phone maker Nokia moved to take control of the world’s leading cellphone software group, Symbian, on Monday, drawing a line in the sand between the Finnish firm and rival Microsoft.
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Nokia said it would buy around one-third in Symbian from Psion, with the British software firm to get an estimated 135.7 million pounds ($252.6 million) in a deal that values all of Symbian at 436.2 million pounds.
The purchase pushes Nokia’s stake to some 63 percent in the venture, which is expected to be loss-making for the foreseeable future. The deal is expected to close in the coming months.
For handset makers, in an industry which expects to sell over 550 million phones in 2004, the move narrows their choice of major software suppliers for new generation phones to two --Nokia and Microsoft.
Leading handset makers Samsung Electronics from South Korea and Germany’s Siemens as well as other handset makers are Symbian shareholders, and the deal will force them to buy the software from a firm controlled by an rival.
“The other investors in Symbian will now have to decide if they want to be part of Nokia or Microsoft. They’re caught between a rock and a hard place,” said John Strand, a mobile telecommunications consultant in Copenhagen.
The ownership change is the second in five months at Symbian after Motorola, the world’s second-largest handset maker pulled out, although it said it still planned to make phones based on Symbian software.
Symbian is the clear leader in making operating software for advanced mobile “smartphones” that run personal computer-style functions such as calendars, contact lists, games and electronic mail on top of voice calls and other traditional features.
Smartphones are a fast-growing segment within the mobile phone sector, which research group IDC said amounted to close to 10 million units in 2003. Most of those phones were powered by Symbian. The segment is forecast to rise to over 125 million in 2007, according to investment bank Merrill Lynch.
Investment bank Merrill Lynch estimates Symbian’s share of the smartphone market at around 80 percent but says this will drop to 40 percent over time as Microsoft and smaller players --Palm and Research in Motion, both of which are strongest in North America, and companies using Linux software -- grab share.
Microsoft has so far been unable to repeat its success in the PC industry and lost early skirmishes in the battle for handset software, with the software giant’s first steps marked by technical glitches and partnerships gone sour.
Nokia shares were up 1.4 percent at 16.89 euros, while the pan-European technology index was up 2.3 percent at 1416 GMT.
But shares in Psion shed around one-third of their value to 64.5 pence, with some dealers saying the price it got for the Symbian stake was too low.
Nokia said Symbian would be managed as an independent entity and that its software would remain available to all customers under the same conditions, itself included.
But industry analysts said the Finnish leader would be able to exert more influence on Symbian’s product development and tailor it to its own needs.
Nokia’s growing muscle within Symbian has led some analysts to question how long other members will stay in the consortium.
Other Symbian shareholders include Japanese-Swedish Sony Ericsson and Japan’s Matsushita Electric Industrial Co.
“Now one can draw an ’equals’ mark between Nokia and Symbian,” said Nordea Securities analyst Janne Rantanen. “It is an open question as to how the smaller shareholders will react.”
The initial reaction from these firms to the move was broadly positive, however.
“Nothing changes for us as a result of Nokia taking bigger stake in Symbian. Symbian software will remain an important tool for us,” a Samsung spokesperson said.
A Siemens spokesman said: “I don’t believe they would have any interest in making it a Nokia standard.” He added Siemens would not make Symbian its sole mobile software standard.
Psion said it sold the Symbian stake because the possibility that Symbian was going to go public was uncertain.
The stake was Psion’s single biggest asset, and the sale leaves it mainly with a business providing rugged mobile computing devices and wireless local area network systems to enterprises.