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How will Microsoft and Google react to Nokia?
As the mobile phone industry comes to terms with Nokia’s move to create an open standard operating system based on the Symbian OS, the feeling is it could create problems for Microsoft and Google.
Both software giants have operating systems with which they are attempting to establish a strong position in the mobile handset market.
But Nokia’s plan to create a royalty-free OS for mobiles has turned the cost model for the software vendors on its head and effectively pulled the rug from under Microsoft and Google.
“Lower costs for the Symbian operating system spell bad news for licensable rivals, such as Google Android and Microsoft Windows Mobile,” said Bonny Joy, analyst at Strategy Analytics.
Last November, a senior executive at Qualcomm told EW that an open software environment was critical for further development of mobile phones.
Enrico Salvatori v-p and general manager for Qualcomm CDMA Technologies Europe was speaking to EW following Google's proposal for an open software platform based on Mobile Linux for mobile devices, which is called Android.
Google’s Android mobile OS is already royalty-free so the larger threat is to Microsoft’s Windows Mobile OS.
The industry is waiting to see how Microsoft will react to the OS challenge. One possible option is for it to cut the cost of their licences.
“They will impact Android on volume and Microsoft on value. Symbian will match Android on zero-Dollar pricing, and this diminishes one of its major competitive advantages. For Microsoft, the pressure will surely mount to cut the price of its license fees to handset vendors, which we estimate to be a relatively high $14 per unit worldwide in 2008," said Joy.
But Nokia’s ultimate aim, unlike Microsoft, is not to sell software, but to use the software to promote increased handset and services sales.
According Neil Mawston, director at Strategy Analytics, Nokia will probably use royalty-free Symbian software as a loss-leader to drive profitable growth in handsets and services in 2009.
“This is a good move for Nokia, because cheaper smartphones for the mass-market will eventually drive higher global volumes of Nokia devices and Ovi content," said Mawston.
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