Could Nokia Corp. take a controlling stake in the smartphone operating system venture Symbian PLC? There is a body of opinion that suggests the Finnish phone giant, which -- along with other major handset vendors -- funds the company, is all but running the show anyway and should make it official by buying U.K. handheld maker Psion PLC’s stake.

“I reckon that Psion will be out of Symbian by the end of the year, and Nokia is the most likely candidate out of the current shareholders to pick up its stake,” says Seamus McAteer, principal analyst at the Zelos Group LLC. “If anyone is going take a controlling stake, Nokia will; it is pretty much controlling the company now.

“Nokia will acquire a controlling stake in Symbian because the company is committed to the platform and is committed to becoming a software company and IP licensor. Its Series 60 platform is based on the Symbian OS. Symbian is taking a back seat to Nokia in the standards bodies.”

“There is certainly an opinion in the industry that Nokia has the lead role in the Symbian partnership and should take control,” agrees Andy Buss, analyst at Canalys.com Ltd. However, he says it’s not clear if the terms of the Symbian partnership agreement would make it easy for Nokia to take a controlling stake. There’s also a question mark over whether Nokia would be happy to take the reins if it meant losing the sense that Symbian’s EPOC operating system has wide-ranging industry support.

Nokia is the cornerstone behind some serious projects to push common specifications in the mobile market. The company announced its Open Mobile Architecture (OMA) initiative in November 2001, a project to lay down a common set of software and applications that will be used in future handsets. The company is also leading a drive for an “open architecture” in developing all-IP mobile networks, announced this February.

Buss says that Nokia “would like control of Symbian” but would like to keep the sense of the Symbian operating system being something of an industry standard rather than just Nokia-only technology. “Nokia will probably want to maintain Symbian as a separate entity, but it will want control,” comments McAteer.

McAteer questions how big a part the other partners in Symbian play anyway: “Motorola Inc. has its own OS; Sony Ericsson Mobile Communications is licensing IP from a number of entities, including Ericsson AB and OSE Systems Inc.; Matsushita is licensing Symbian technology via Nokia; and Ericsson doesn't have much interest."

Despite this, Buss reckons that the original Symbian partnership agreement could stand in Nokia’s way if the firm decides to take a controlling stake. It is not clear if this is the case, although, it is worth pointing out that Ericsson has managed to transfer its original stake to the new Sony-Ericsson joint venture, so it is possible, at least in certain circumstances, to transfer a stake in the Symbian partnership.

If Nokia was take a controlling stake it would likely do so by buying out Psion PLC, the company that originally created the EPOC operating system. Psion, which once dominated the European handheld scene, has seen better days, and last year it said it would stop making personal organizers altogether, after being beat out of the market by Palm Inc. and others.

Psion, however, is adamant that it will not sell its stake in Symbian, at least not before the venture goes public. “Psion is in an entirely secure financial position to continue funding Symbian to its IPO,” says a spokesperson for Psion, adding that there is “no expectation” that the company will sell its stake before the flotation.

There are, however, one of two conditions that have to be met before Symbian will be floated. Either the operating system has be shipping in volume, or the IPO market has to be in good health, or both. If Nokia decided to use the EPOC OS in more of its phones, that would certainly take care of the volume problem. But the era of mobile companies going for multimillion-dollar flotations is probably over, at least for time being.

London-based Symbian refused to comment on the possibility of Nokia taking a controlling interest in the venture, as did Nokia. “It is the Nokia policy not to speculate on speculations,” said Pekka Isosomppi, communications manager at Nokia Mobile Phones.

— Dan Jones, Senior Editor, Unstrung
http://www.unstrung.com