The Android Threat: Banking on Symbian's Maturity

Details of Google's plan to enter the mobile software market are expected on Tuesday when T-Mobile USA displays the first phone based on Google's Android platform in New York, sources familiar with the plan have said.

Free and Mature

In response to Google's impending entry into the market, the world's top cell phone maker Nokia said in June it would buy out the remaining shareholders of UK-based smartphone software maker Symbian for US$410 million, then give the software to not-for-profit organization and make it royalty-free.

"I think that the fact there is a mature platform that is being introduced in an open source environment kind of changes the game," said David Rivas, head of technology management at Nokia's S60 business, the platform that runs on Symbian.

"The choices up until then were: You could go with proprietary and mature, or you could go with immature and free. Now there is a choice that is free and mature," Rivas said.

Already Out There

Nokia, Motorola (NYSE: MOT) , Sony (NYSE: SNE) Ericsson (Nasdaq: ERICY) and others will contribute assets to the not-for-profit Symbian Foundation, which unites handset makers, network operators and communications chipmakers to create an open source platform.

Rivas pointed to the 226 million Symbian phones that had been sold by the end of June, saying they gave Symbian an advantage over the new platforms of Google and Apple (Nasdaq: AAPL) .

"All developers tend at the end of the day to look for something that has impact in the context of volume," Rivas said.

There were 92 new Symbian phone models in development at the end of June, while 249 models already use the operating system.

Industry Support

So far, 40 companies have signed up to join the Symbian Foundation, compared with 34 for the Open Handset Alliance that is developing Android.

Operators also benefit from the platform that combines three different Symbian offerings, as it cuts their support costs.

"From AT&T's (NYSE: T) perspective we are very supportive of reducing the fragmentation of device operating system environments," said Kris Rinne, senior vice president for architecture and planning at the No. 1 U.S. mobile operator.

She said AT&T plans to introduce more Symbian phones, while also monitoring developments at Android.

Pressuring Microsoft

Nokia expects regulatory approval for its Symbian deal by the end of the year, with the first integrated platform due out next year.

Symbian's move to go open source and free in competition with Google's new Android platform is putting increasing pressure on Microsoft (Nasdaq: MSFT) , which still charges handset makers $8 to $15 per phone for its software, according to research firm Strategy Analytics.

Microsoft has seen little momentum in its part of the mobile phone operating-system market, holding on to around 10 percent market share in smartphones.

Nokia's Rivas said he saw little future for the practice of billing handset vendors for each phone sold with a particular operating system.

"That kind of business model is likely to struggle. There is not a lot of those left out there. I think its gonna get tougher and tougher," he said.