Summary:

Nokia announced this morning that it will pay $410 million to buy the remaining shares of Symbian that it did not already own and then turn…

imageNokia announced this morning that it will pay $410 million to buy the remaining shares of Symbian that it did not already own and then turn the assets into a foundation that provides open-source software to developers. What we are talking about here is not a simple task, and as an executive in the morning conference call said, to their knowledge, this is the largest open-source endeavor that anyone has attempted — it brings together millions of lines of code that companies have invested billions of dollars in to create, and now the goal is to make it free to developers and handset makers alike. This radical move by Nokia, and the collapse of Symbian as we know it today (on its 10th anniversary no less) shows how rapidly the wireless industry moves, and clearly demonstrates the mounting competition incumbents are feeling from new entrants, such as the LiMo Foundation, which supports a Linux platform, and Google’s (NSDQ: GOOG) Android operating system, and even platforms such as Microsoft’s (NSDQ: MSFT) and Apple’s. Presentation.

There’s still a lot to be figured out, but here are some details on how it will come together based on a conference call hosted by Nokia, Symbian, Motorola (NYSE: MOT) and Sony (NYSE: SNE) Ericsson (NSDQ: ERIC) this morning:

Symbian’s current market position: This year, already 20 new devices have been announced on Symbian version 9 that were made by five handset manufactures. This year, Symbian will surpass 200 million cumulative sales since its inception 10 years ago. According to Canalys, the leading operating-system smartphone market for the past year as of Q1 was broken down like this: Symbian (60 percent); Linux (12 percent); Microsoft (11 percent); RIM (NSDQ: RIMM) (11 percent); Apple (NSDQ: AAPL) (4 percent); Other (2 percent).

Platform consolidation: The purchase of Symbian by Nokia and the formation of the foundation will lead to platform consolidation. Nokia will contribute its S60 platform, Symbian will contribute its OS, Sony Ericsson and Motorola will provide its UIQ technology and NTT DoCoMo (NYSE: DCM) will provide MOAPs. Eventually, the foundation will provide one platform based on all of this technology, creating less fragmentation in the market. For instance, the UIQ platform will be supported for some time, but it will eventually go away with a migration path being provided over to the new Symbian platform. Nokia says the benefit of the new platform is that it will be made up of very mature technologies. “We are making an announcement of something new today, but we are leveraging something that already exists, which sets it apart in the mobile industry,” said Mary McDowell, Nokia executive vice president. “The platform is the leader in the industry today with already 200 million devices shipped, and has strong support from the top five OEMs, and and the best part about this, is that it will be now available for free.”

Timeline: The timing of this will be very important as Google pushes to release its first handset by year-end, and the LiMo Foundation continues to gain ground. Nokia plans to close the acquisition of Symbian in Q4 of this year; then the various companies, like Sony Ericsson, Motorola, and NTT DoCoMo will make the technology available to the foundation by the first half of 09. At that point, the Foundation will officially launch, and the software — as is — will be provided for free to the foundation’s members; By the first half of 2010, the foundation will release its first software version. The overall transition to open-source will take longer with it happening over the next two years.

Symbian as a company: The employees, revenues and operating costs of Symbian will be absorbed by Nokia (NYSE: NOK). No developers will actually work at the foundation, but rather will be spread throughout all the member companies. In the conference call, McDowell said Nokia expects three economic benefits: simplification of the supply chain (the consolidation of the platform will enable Nokia and other partners to bring products to market faster with more features that can be a driver of profit; second, the transition to foundation will enable the company to unleash innovation and create new ideas and concepts, which will enhance new offerings and drive operating profit, and thirdly, Nokia will not have to pay licensing fees to Symbian anymore (as other handset manufacturers).

Technology integration: This sounds like a pretty inclusive policy. The foundation will provide the integration of such environments as Java, Adobe (NSDQ: ADBE) FlashLite and Microsoft Silverlight.

Driving innovation: Everyone on the call this morning seemed to echo the same idea that by being open-source and opening the code up, it will drive innovation and make the platform a leader. Mats Lindoff, CTO, Sony Ericsson: “Through its openness and completeness, it will fuel innovation, and it will bring growth to the mobile industry, service providers, developers and consumers, as well.” Motorola VP Christy Wyatt: “By unifying the ecosystem today and by leveraging existing technology, we believe the combined efforts will truly accelerate the Symbian ecosystem, and provide greater opportunities for ourselves and partners.”

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