Nokia deal may damage Symbian challenge to Microsoft PocketPC

Nokia's plans to become the majority shareholder of Symbian could affect the mobile software developer's independence and prevent...

Nokia's plans to become the majority shareholder of Symbian could affect the mobile software developer's independence and prevent the Symbian operating system from challenging Microsoft's rival PocketPC, analysts have warned. The deal is subject to regulatory approval.

Nokia has announced it will pay fellow shareholder Psion a fixed sum of £93.5m and a payment of 84p for each Symbian-based device sold during 2004 and 2005. In return, Nokia will see its stake in Symbian rise from 32.2% to 63.3%.

Symbian, the dominant software for mobile phones, has been touted as a long-term alternative to Microsoft PocketPC for a range of mobile device, from smartphones to handheld computers. However, to date, the Symbian operating system has mainly been deployed in mobile phones aimed at consumers rather than business users, who increasingly require connectivity between their mobile devices and corporate IT systems such as a Microsoft Exchange server.

A growing number of business users are expected to adopt smartphones in the next two years, meaning Symbian could become more important to corporate users. However, Paolo Pescatore, mobile analyst at research firm IDC, said the increasing influence of Nokia could dissuade businesses from using Symbian-based devices.

"Nokia is going to dictate how Symbian is going to be run and it is going to cause some unrest in the market," he said. "We could be moving back to an environment where [the platform] is not open."

Jessica Figueras, practice leader for telecoms at analyst firm Ovum, said the deal could be "the beginning of the end for Symbian as a cross-supplier opponent to Microsoft".

One of Symbian's strengths has been its support and adoption by several of the handset market leaders. Becoming reliant on Nokia would jeopardise Symbian's independence, said Figueras.

"Symbian has been assiduously courting the operator community, promoting itself as willing to compromise in order to help them achieve their goals," she said. "With Nokia in the driving seat, this pitch loses its credibility."

David Levin, chief executive at Symbian, insisted that Nokia would continue to "endorse Symbian's strategy and operational activities as an independently governed company working with partners across the industry".

Indeed, the Nokia deal may have come about because the other shareholders - which include Samsung, Siemens and Sony Ericsson - wanted to focus on other areas, Pescatore said.

"We can say bad things and good things about Nokia but it may have come about because the other partners have become less interested [in Symbian]," he said.

Read more on Data centre hardware