Nokia and Symbian Head For Open (Source) Water

(MoneyWatch)  When Nokia announced that it was ready to buy the outstanding 52 percent of mobile device OS vendor Symbian for about $410 million, the handset manufacturer's stock started heading up, and for good reason. Nokia decided that it would make the software royalty-free open source. In one move, it had tripped up the plans of Google, Microsoft, and Apple.

You can't use computers without an operating system, and cell phones are increasingly small computers that talk back to you. As Microsoft has demonstrated for decades, if you own the OS, you can largely control the industry. But times change, and so do people's habits. More business users rely on portable devices to check email, keep their schedules, and do the other mundane tasks that once needed a desktop or laptop. If you don't have a lock on the operating systems they use, you don't have a practical lock on their loyalty, because they don't want to learn something new.

The thing is, Nokia won't go into this alone. Look at the list of companies that will take part, according to a CSS Insight analyst Geoff Blaber:

Before today, Symbian was owned by Nokia, Ericsson, Sony Ericsson, Panasonic, Siemens and Samsung. The new entity [called the Symbian Foundation] will be steered by a board of 10 members: five from phone manufacturers (Nokia, LG, Motorola, Samsung and Sony Ericsson) and five from network operators and chip makers (AT&T, NTT DoCoMo, Vodafone, STMicroelectronics and Texas Instruments).

That's one hell of a consortium ?€" one that includes the biggest cell phone manufacturers, some impressive names on the chip front, and AT&T, Apple's first carrier partner for the iPhone. That's got to hurt the big red fruit contingent.

This acquisition is going to be painful for Google and Microsoft, as well, according to Strategy Analytics analyst Bonny Joy:

Lower costs for the Symbian operating system spell bad news for licensable rivals, such as Google Android and Microsoft Windows Mobile. 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.

Pennies count in the handset business, so cutting $14 in cost becomes mighty attractive.

Don't take this as a simple "acquire the product and slash the expenses" strategy, either. Reuters reports that Nokia says it plans to keep all of Symbian's staff:

"I think the job cuts would be highly unlikely in the future. There are absolutely no plans," Kai Oistamo, the head of Nokia's devices business, told Reuters on sidelines of a news conference."There will be even bigger need of innovation, to be ahead of the curve, when we are making this platform. There's never been an overflow in this industry of talented and skilled people."

But it's about a lot more than a few hundred million, which is ultimately small potatoes to such companies. If the Symbian Foundation can affix its image onto the face of mobile computing, through the current Symbian (and any variations it might be considering), that might provide leverage in a much wider world of information delivery and computing ?€" exactly where Google, Microsoft, and Apple all want to be.