[Is Symbian coming to the end of its shelf life? Research Director Andreas Constantinou dissects the motivations behind Nokia's strategy and why Symbian is getting a new lease of life]
Only two short years and four months since it was announced, the Symbian Foundation is shutting down. With it dies Nokia’s second effort at creating a licensable application platform for mobile phones (the first one was S60) and to compete against Android. While Nokia is shunning to make the closure official, the last OEM supporters – Samsung and Sony Ericsson – have officially killed plans for Symbian products (see here and here) and Symbian staff are being given redundancy notices and making career moves on LinkedIn. [update: On November 8, it was announced that Nokia will regain control of the Symbian governance process and that the Symbian Foundation will be reduced to a licensing team]
The writing has been on the wall since early 2010, when Nokia took out a â‚¬500 million loan to (among other things) help sustain funding into the Symbian Foundation, whose membership fees were due to be renewed in April 2010. Symbian Foundation relied on OEMs shipping handsets to take on the operational costs at the tune of 5 million GBP per OEM. The final blow came with the departure of SyFo’s CEO and co-architect, Lee Williams.
The death of Symbian
Symbian Ltd., the OEM-backed consortium that funded Symbian development between 1999-2008 had long been suffering from an imbalance of power and poor strategic decision-making. There were three things wrong with Symbian Ltd.
Firstly, with Nokia owning 48% of Symbian Ltd. shares, the Finnish OEM had been driving the agenda at Symbian to the detriment of its OEM partners, Secondly, since the UI was severed from the base OS in 2001, Nokia had been squeezing the value out of the Symbian operating system and into its own S60 UI, middleware and applications suite platform. This meant that other OEMs had to spend considerable effort integrating Symbian with their own UIQ or MOAP layers and filling the gaps that Nokia left – effectively leading to handsets which were expensive to build.
Thirdly, with the decision to have Symbian baseporting owned by the OEM and not Symbian Ltd, each manufacturer had to spend millions to get Symbian ported onto the hardware platform, in essence reinventing the wheel. While this naturally gave Nokia the edge in producing more Symbian models more often, it meant that for other OEMs most of the budget was spent in baseporting (i.e. getting the phone to work), rather than in differentiation. In 2007 Symbian Ltd. was desperately in need of a major governance re-engineering operation.
The coup de grace arrived with the launch of Google’s OHA in November 2007, signaling two major changes in the phone industry: firstly, that open-source development (inspired by mobile Linux) was now supported by a major cash-rich backer, and not an operator consortium (LiMo) or a loose congregation of Linux system integrators and design houses (Azingo, Purple Labs, WindRiver and Montavista). Secondly, that zero royalties were now the norm and operating system development was turning from a revenue generator to a loss leader. With Android changing the rules of the game, Nokia knew that for Symbian to compete in this new world, it had to be both open source and zero royalty.
Seven months on from the Android disclosure, Nokia announced that it would be buying the remaining Symbian shares outright, paying up the equivalent of 2.5 years of royalties or 2x the revenues of Symbian Ltd – a paltry evaluation for the top smartphone OS. For Nokia it was a financial and strategic move; it made financial sense because Nokia would slash its Symbian maintenance costs (from 100 million GBP of annual license fees to 5 million GBP of annual membership fees) by sharing the SyFo costs with other OEMs on the board. It made strategic sense because with the ownership change, Nokia convinced Sony Ericsson and DoCoMo to abandon UIQ and MOAP respectively and marginalised Windows Mobile which was still royalty-based. Meanwhile, Nokia could still exert the majority influence into the Symbian roadmap by employing most engineers and most package owners (effectively well into 2010).
In retrospect, Nokia failed with both S60 and Symbian Foundation by insisting on a winner-takes-all mentality, i.e. taking roadmap control away from its OEM development partners which long-term destroyed the value in the partnerships. This winner-takes-all-mentality is nothing new; it was already harming Symbian as we had argued back in 2005. The full open sourcing of the Symbian platform in February 2010 or the cute playful new brand did not succeed in stopping neither the developer defection (see our Developed Economics report) or the OEM defection from Symbian.
With Nokia shares performing miserably over the last four years, the Finn-led board took the bold decision to oust Olli-Pekka Kallasvuo and bring in a Canadian, Stephen Elop to turn the boat around. 41 days into the job, Elop announced the cutting of 1,800 jobs at Nokia and the adoption of Qt as the main development environment on top of Symbian handsets.
For Nokia, Qt presents both an opportunity and a challenge. On one hand it’s the most capable cross-platform application environment today boasting reach across mobile, PC and STB – plus depth with Qt providing a complete API wrapper on top of the native OS (and much wider API coverage than GTK to which it’s often unfairly compared). On the other hand Nokia has notoriously mismanaged the Trolltech acquisition of January 2008, with the troll CEO, CTO and key engineers abandoning ship. Meanwhile, Nokia has created a Qt break across Symbian and MeeGo UIs and not managed to fully deploy Qt on Symbian 2.5 years after the acquisition (note how Qt Mobility APIs are still way incomplete).
Long live Symbian
With Symbian Foundation soon to be diagnosed dead, the rumours about Nokia replacing Symbian are rampant. Many industry pundits are prognosticating that Nokia will adopt Android – which in 2010 is going stronger than ever – or Windows Phone 7, which comes with the freshest UI since the widget based paradigm popularised by the Jesus phone. Despite the prophecies, Symbian will live on for many years to come. As the French expression goes, Le Roi est mort. Vive le Roi.
There are two reasons why Nokia won’t be abandoning Symbian anytime soon.
Firstly, Symbian is tightly integrated with Nokia’s variant management process. Nokia is the only OEM that has mastered variant management, i.e. being able to generate 100s of variants (SKUs) at the press of a button. That’s how Nokia can deliver 100s of customised smartphones to operators and retailers around the world. This variant management process is ‘hardcoded’ to Symbian, which means that replacing Symbian would seriously compromise Nokia’s ability to cater to operator requirements around the world and it would seriously hurt its market share.
Secondly, Nokia’s economies of scale rely on in-house control of core components, and the operating systems is one of them. If Nokia were to license Windows Phone it would reduce its differentiation to industrial design and Ovi alone. In the case of Android, Nokia would have to branch Android (and to sustain the cost of Android development), port Qt on Android which means another 12+ months for a stable implementation. While this remains a long-term possibility, it is still a gamble when Nokia’s priority should be to focus on killer devices and not a killer OS. Qualcomm’s BREW MP is another candidate but only when Qualcomm has a good developer platform story and that means waiting for BREW MP to launch a web-based platform akin to RIM’s WebWorks.
Symbian may no longer be a symbiotic system, but will live within Nokia for many years to come as the workhorse under the hood of Nokia smartphones.
The King is dead, long live the King.
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