Red Herring, Q Mentioned a lot>
The Symbian liberation
With its OS for wireless devices,
Symbian may free computing from
Microsoft's grip.
By Alex Lightman
Red Herring magazine
From the October 1999 issue
For the past three years, Red Herring's Digital
Universe issue has tried to choose the 100 most
important companies of the electronic economy. Though
many of our choices are pillars of the technology
industry, others have been forging entirely new markets.
Our readers may not have heard of these upstarts, but
we chose them because we knew that they wouldn't
remain unknown. These are the companies that will
change the world.
Symbian, a privately held
developer of operating systems for
handheld devices, is one such
company. In fact, we liked it so
much that we named it our best
overall private company in 1999,
and we also recognized it with our
Best Long-Term Potential award
(see our Top 100 Companies
profile, June). If its Epoc operating system takes hold,
Symbian stands a chance of becoming the Microsoft
(Nasdaq: MSFT) of the growing wireless data
communications industry--a market that includes
everything from cell phones and personal digital
assistants to palmtop computers and Internet appliances.
According to Ericsson Cyberlabs (Nasdaq: ERICY), the
research and forecasting arm of the mobile phone
manufacturer Ericsson, 1 billion people will be using
wireless devices by 2003, and 10 to 15 percent of them
will have so-called smart phones or smart organizers --
devices that support voice communications, data
applications, and Internet connectivity. Symbian hopes
to dominate the smart-device market by fostering the
development of this new class of sophisticated wireless
applications.
Indeed, at Symbian's first
developers' conference in June,
Lauri Hirvonen, a senior customer
service manager with Nokia
(NYSE: NOK), tempted 600
attendees with his vision of a
wireless future. "Today you have
keys, wallet, credit cards, watch,
electronic organizer, mobile phone,
computer, and television," he said.
"Tomorrow we just want you to
have all of those capabilities
combined in a Nokia Smart
Phone."
Nokia isn't simply one of Symbian's partners -- it is an
investor as well. Even more impressive, Symbian's
backers collectively account for over 75 percent of the
mobile phone market. Ericsson and Motorola (NYSE:
MOT) are also founding shareholders of Symbian;
Matsushita (NYSE: MC) joined this spring. With such
hugely influential partners, Symbian has an almost
unprecedented potential to impose the Epoc OS as a
standard for wireless access through smart devices.
Among the six largest cell phone companies by market
share, only fifth-ranked Alcatel (NYSE: ALA) is not
part of Symbian's effort.
But the decade's reigning OS champion, Microsoft, will
not stand idly by as Symbian makes its bid for
dominance. Moreover, other challenges -- including the
open-source software movement, vendors of other
embedded operating systems, and the potential for
conflict among Symbian's shareholders -- have only
begun to surface. Still in its earliest stages, the battle
over a standard OS for the wireless world promises to
be epic.
PSIONIST MOVEMENT
Symbian is building what someone (so it might as well
be us) will inevitably call a Symbianese Liberation
Army. At the June developers' conference, we met the
company's executive vice president of marketing and
sales, Juha Christensen, who explained that he plans to
get venture capitalists to pair up with the startup
developers that will build their businesses around the
Epoc operating system. These developers or their
affiliates would then pay very reasonable royalties to
Symbian of $5 to $10 per device. With developers in
more than 35 countries, the company plans to grow into
a global community held together by Symbian-run
training and education facilities called Epoc Centers.
Developers from all over the world attended Symbian's
conference and seemed thrilled by the company's
potential. According to Arindam Das, a developer with
Ubest, a midsize developer of contact management
software headquartered in Calcutta, "India is now the
leading source of software in terms of lines coded, and
Epoc will enable India's developers to make software
for millions more devices. We view it as a whole new
market."
Symbian grew out of Psion, the leading British maker of
handheld computers. Almost three years ago Psion
started licensing its Epoc software (which was first
introduced in 1982 and, according to Psion, is embedded
in some 3.5 million handheld devices) to companies that,
with the convergence of different wireless and other
small electronic devices, looked like potential
competitors to the hardware side of Psion. A team at
Psion's software division that included Nicholas "Colly"
Myers (who was then Psion's managing director and is
now Symbian's CEO), Mr. Christensen, and Paul
Cockerton, a marketing communications manager,
decided that the software side should become a
separate entity to prevent conflicts of interest. They
convinced each of the Big Three cell phone
manufacturers -- Nokia, Ericsson, and Motorola -- to
put up about $50 million, for which they each received
23 percent of the new company. (Psion got the
remaining 31 percent for its software contribution.)
POLITE FANTASTIC
The unusual coöperation of Nokia, Motorola, and
Ericsson -- all of which are, of course, fierce
competitors -- suggests Symbian's great potential. But
despite such blue-chip backing, Microsoft still looms as
a great threat. For now, Symbian is maintaining a
uniquely British sense of etiquette and politeness. As
Mr. Myers explains diplomatically, "Microsoft is the
leader on the desktop. We support and work well with
Microsoft."
Microsoft is working with partners like Wireless
Knowledge (which it partly owns) and British Telecom,
but it has yet to announce any large deployments of
smart phones running on 32-bit operating systems. Then
again, Symbian has not shipped a 32-bit version of Epoc
on a smart phone, either. As Phil Holden, the product
manager for Microsoft's productivity appliance division,
says, "Epoc and Windows CE are both 32-bit operating
systems, and both have the same share of this market at
present: zero. It will be 12 to 18 months before these
smart phones are shipping in quantity." But he points out
that Microsoft has one advantage: "Our millions of
developers can use similar APIs [application
programming interfaces] for servers, desktops, laptops,
handhelds, and soon smart phones and even smart
cards."
Mr. Holden makes a compelling point. With over 80
percent of all network data residing in private corporate
databases -- and much of it accessed through
Microsoft's Windows and Exchange -- corporate buyers
will require interoperability with Microsoft's products.
Mr. Holden explains that a key to the company's
wireless vision is that it wants to allow customers
access to this primary store of information. For
example, customers could receive their personal or
business email wirelessly without having to open a
separate account just for the device they're using, as
they must now do for, say, the Palm VII, which requires
a Palm.net account.
To seize this market, Microsoft and Qualcomm
(Nasdaq: QCOM), the pioneer of the wireless
communications protocol CDMA, joined forces to
underwrite the creation of Wireless Knowledge. The
startup's CEO, John Major, has a unique perspective on
how Microsoft will coexist with Symbian. He believes
that roughly 300 million cell phones will be connected to
the Internet by the end of 2002 (a larger number than
what the research firm IDC projects), and that roughly
one-third of these phones will need to access
collaborative applications, primarily the future versions
of Microsoft Exchange and IBM's (NYSE: IBM) Lotus
Notes. Although Mr. Major sees Symbian's parents as
its greatest asset -- "Nokia alone can ship 80 million
units a year" -- he doesn't view the relationships as
dependable. "Those companies have walked away from
technologies and investments before," he says.
Wireless Knowledge's other parent, Qualcomm, is
already maneuvering in wireless operating systems. Its
new Q-phone uses the Palm OS from 3Com's (Nasdaq:
COMS) Palm Computing division, and Qualcomm has
announced that it is putting Windows CE onto CDMA
chips. CDMA (a technology for which Qualcomm holds
250 patents) is less widespread than GSM, the
prevailing standard in Asia and Europe, but it is
technically superior because it can be made much more
secure and can handle heavier traffic over similar
spectrum.
Executives at Symbian think that Microsoft will
eventually leapfrog Windows CE and develop or buy a
new wireless-device OS, which would give Symbian a
window of opportunity while the standard is being set.
Also, they say that unlike Epoc, Windows CE was
optimized for small PCs rather than for wireless
devices: while a typical CE configuration eats up 40 MB
of storage, Epoc uses only 8 MB.
SOURCE MAJEURE
But Symbian faces challengers other than Microsoft.
The open-source movement in general, and the
increasingly popular Linux OS in particular, will also
make life difficult for Symbian. Linux can be
downloaded free, and 1 MB of customized Linux can
run a smart phone.
And with Cygnus's recent release of the first complete
open-source integrated development environment,
developing Linux applications should become more
straightforward. Furthermore, VA Research (also a
Red Herring top company) is putting Linux on chips
and extending the fastest-growing OS to more
platforms.
Also, the number of embedded operating systems is
growing. Netsilicon's (Nasdaq: NSIL) and Intel's
StrongARM chips can now support TCP/IP, HTTP,
Ethernet, and other networking protocols, and there are
royalty-free embedded operating systems (like pSOS or
VxWorks) residing right on these chips. Datalight,
Vadem, iReady, GoAhead, EmWare, and Pharlap all
provide embedded Internet connectivity and OS
capabilities, and all will be competing with Symbian. In
the near future, such competition will likely drive down
the price of software with Epoc's functionality to $2 per
chip, royalty free, with no floor in sight.
Symbian will also have to face the threat of competition
from its own shareholders. After all, they compete with
one another in the mobile phone market. Nokia, for
example, has its own smart-phone software. And
Motorola purchased Starfish Software, a company that
develops software for mobile devices, and may end up
competing directly with Symbian.
But according to Jill House, a smart-products analyst for
IDC, Symbian's singular focus may insulate it from its
big parents, which have countless other development
efforts to consider. "Motorola and Nokia have their own
internal groups that may compete with Symbian, but the
fact of the matter is that Symbian is 100 percent
focused on the operating system and Motorola and
Nokia are not," she says.
And even with all the competition, Mr. Major says he is
optimistic about Symbian's ability to coöperate with
Microsoft. "Microsoft will continually seek to improve
Windows CE, and Symbian needs its products to
interoperate with both Windows and collaborative
applications." His advice to Symbian? "Don't close the
door for Epoc to morph into a Windows-aligned
application."
But will Microsoft need anything from Symbian? One
huge advantage that Microsoft holds is its range of
software. "It's easier to port than to build from scratch,"
says Mr. Holden, who uses his own liberation-army
analogy: "Making CE the standard for all small smart
devices is a long march. I was part of the team on
Windows NT 3.1, and it's taken us more than seven
years to get to the position we are at today."
Ultimately, Symbian's courtly ways may win it friends,
but the company has to go on its own long march to
achieve the great potential we see. Clearly, Windows
CE, Linux, and other embedded operating systems
increase the distance that must be traveled. For
Symbian to succeed, not only will the Epoc OS have to
become the standard for wireless smart devices, but its
developers must also make sure that its shareholders'
rivalries do not destroy it.
Alex Lightman is president of Infocharms.com,
which develops wireless Internet technology. Send
comments to letters@redherring.com.
Symbian
Motorola
Psion
Industry association of more than 90 companies that
has created a de facto standard for wireless services
International Telecommunications Union (ITU) site
explaining ITU's vision for wireless communications in the
21st century
Portion of Nokia's site outlining technology, products,
and standard for the next generation of wireless networks |
