When Nokia moved to take full control of software licensing company Symbian earlier this summer, it announced that it would spend €264m to buy the 52% of shares it did not already own in Symbian Ltd. That was enough to grab the headlines, yet the real story turns on why Nokia has decided to turn its quarry into the not-for-profit Symbian Foundation. Why would a company buy the golden goose of smart phone operating systems only to share it with the competition?

While perhaps less obvious, this is one of the more interesting developments in the mobile phone sector since Apple launched the iPhone. It represents an aggressive move by Symbian to dominate the market for smartphone operating systems (OS), yet one that could be termed a ‘wiki manoeuvre’ – throwing open a proprietary model to developers, disarming key competitors such as Google and shifting creativity to other applications.

Naturally, Nokia could have bought Symbian and developed the company’s already dominant OS as a proprietary one. However, although Nokia has a 40% share of the 1.26 billion phones sold worldwide in 2007, such a move would limit the number of developers able to write software. This would have stifled innovation in a sector whose future is projected to lie in creative new services.

Nokia has chosen instead to create the Symbian Foundation. Due to start in early 2009, founder members of the new consortium include the five major handset manufacturers (Nokia, Sony Ericsson, Motorola, Samsung, and LG), together with Vodafone, NTT DoCoMo, Texas Instruments and STMicroelectronics. Current Symbian employees will transfer to Nokia, then some will move over to the Foundation. Membership is open to all for an annual fee of $1,500 (€965).

The aim is to stimulate innovation by creating a royalty free, open source OS by 2010 available to all members under the Eclipse Public Licence. Some elements will be open source at launch and software written now for Symbian will be forward-compatible.

Making Symbian available to software developers royalty-free will bring it head to head with the existing open source Linux LiMo platform. Mike Grant, partner at Analysys Mason suggests a major rationale for the Foundation is to head off any serious investment in smartphone OS by other handset manufacturers that may threaten Symbian. “This is a pre-emptive strike which acts to slow down any momentum which might have developed behind the Linux LiMo platform –perceived to be a bigger technical threat than Google’s Android. Nokia is in a very strong position and the Foundation may improve that, cutting off potential threat.”

All Foundation members will influence platform development and will donate their user interface assets at the start: Nokia’s S60; UIQ from Motorola and MOAP developed by DoCoMo. Eventually these three different and incompatible user layers will be integrated into one OS, eliminating a significant barrier to application development and deployment.

“Operators welcome the move to open platforms because they can do their own customisation, add value and ensure the platform develops to meet customer needs,” explains Guido Arnone, director of terminals, products and technology at Vodafone. “Platform development will be shared across multiple vendors so cost less and speed up application creation plus make it easier for the community of developers. The Foundation will make the platform more independent, industry wide, less fragmented and more structured. The focus will move away from platforms to competing on applications.”

Symbian’s success will be measured by the number of licences it sells and how many phone manufacturers choose to install it on how many models. Manufacturers add functions to make phones attractive to operators, sales channels and users; developing applications is easier using open source OS. “There is no obligation for manufacturers or Foundation members to use Symbian,” says Adam Leach, principal analyst at Ovum. “The worldwide success of Symbian is on the back of Nokia’s own portfolio since it is the only company shipping these devices in volumes. The question is, will there be lots of Symbian devices from manufacturers apart from Nokia?”

According to Strategy Analytics’ market statistics for the first quarter of 2008, Symbian shipped 18.5 million smartphones representing a 58% market share. (Symbian estimates there are over 206 million Symbian smartphones worldwide in 235 models from eight different manufacturers; and over 18 million units were shipped in the first quarter of 2008.) Nearest rival Blackberry shipped 4.3 million smartphones (13.5% share); Linux 3.7 million (11.6% share); Microsoft three million (9.4% share); with others accounting for 2.4 million units and a 7.5% share. The first phones based on Google’s Android platform are due out late this year and early 2009.

Mary McDowell, executive vice president and chief development officer for Nokia says: “Neither Microsoft nor Google are a threat because Symbian has a massive installed base and innovation from the five manufacturers who have the biggest market lead. Operators are delighted especially since we are unifying the three user interfaces on top of Symbian.”

Despite common misconceptions, Symbian and Apple do not compete. As a manufacturer running a closed, proprietary environment, Apple’s success depends on selling its own devices. It does not licence other players to develop applications for any of its hardware.

“Symbian will continue to set the benchmark for the next ten years,” believes David Wood, Symbian’s executive vice president of research. “Symbian has a proven track record and confident road map and will build the next steps on top of a stable software code. The Foundation will maintain and distribute code lines, manage developer relationships and communicate with the world. This is a step-by-step evolution to open source.”

Nokia sees the Foundation as a logical step in the evolution of smartphone software, satisfying a market desire to move away from device hardware into applications and value-added services. While this suits Nokia’s new Ovi services platform, it should also stimulate creativity, resulting in more interesting, innovative and useful mobile applications for all.