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The question was familiar, but it was the first time a reporter had asked me to go on the record since I left PalmSource. She said, "Given all the uncertainty about Palm, should people avoid buying their products?"
I asked what uncertainty she meant.
"You know, all the uncertainty about what they're doing with Microsoft. It's the same as RIM Blackberry, where people say you shouldn't buy because of the uncertainty about their patents."
I'm glad to say that my answer today is the same as it was back when I worked at PalmSource: buy what you need and don't worry about what people say.
If you look for uncertainty, you can find it for any mobile product on the market. Symbian's losing licensees. Microsoft has lost licensees (and missed a few shipment deadlines). Both platforms are extremely dependant on single hardware companies -- Nokia for Symbian and HTC for Microsoft. And for every device there's always a new model or a new software version about to obsolete the current stuff.
Obviously, if a company's on the verge of bankruptcy, you should be careful. But Palm is profitable, and they know how loyal Palm OS users are. They have a huge financial incentive to keep serving those users as long as the users want to buy.
RIM is a slightly more intimidating issue because you never know what the government might do. One week RIM's on the brink of ruin, the next week the patent office is about to destroy the whole case against them. This sort of unpredictability doesn't encourage innovation and investment, which I thought was the whole point of the patent system. What we have now seems more like playing the lottery. But I don't think it's going to lead to a shutdown of RIM's system. If NTP destroys RIM's business, there won't be anything left to squeeze money out of. I think what you're seeing now is brinksmanship negotiation from both sides. It's entertaining, but not something you should base a purchase decision on.
Yes, you can get yourself worked up about risk on a particular platform if you want to. But that level of risk is miniscule compared to the near certainty you'll be disappointed if you buy a "safe" product that doesn't really do what you need. There's much more diversity in the mobile market than there is in PCs. One brand often isn't a good substitute for another, and a product that's appealing to one person may be repulsive to another.
If you're an individual user, you could easily talk yourself into buying a device you'll hate every day. If you're an IT manager specifying products for your company, you could easily end up deploying products that employees won't use.
The safest thing to do is ignore the commentators and buy the device that best meets your needs.
When I worked at Palm, I was always amazed at how different the mobile market looked in various parts of the world. Although human beings are basically the same everywhere, the mobile infrastructure (key companies, government regulation, relative penetration of PCs, local history) is dramatically different in every country, and so the markets behave very differently. Even within Europe, the use and adoption of mobile technology varies tremendously from country to country.
And then there's Japan, which has its own unique mobile ecosystem that gets almost completely ignored by the rest of the world, even though a lot of the most important mobile trends started there first (cameraphones, for example).
I try to keep tabs on Japan through several websites that report Japanese news in English. Two are Mobile Media Japan and Wireless Watch Japan. They both post English translations of Japanese tech news, and you find all sorts of interesting tidbits that are almost completely beneath the radar in the US.
Case in point: at the end of November, NTT DoCoMo announced that it is raising its ownership of Access Corp from 7.12% of the company's stock to 11.66%, for a price of about $120 million. That's right, the same Access that just bought PalmSource. So DoCoMo, one of the world's most powerful operators, now owns 11.66% of Palm OS and the upcoming Linux product(s). This story got passing mentions on a couple of enthusiast bulletin boards, but I didn't see anything about it anywhere else.
It's possible that the DoCoMo investment has nothing to do with Palm OS or Linux. Access provides the browser for a lot of DoCoMo phones, and it frequently subsidizes suppliers in various ways for custom development. But $120 million is a lot for just customizing a browser…
DoCoMo is a strong supporter of mobile Linux for 3G phones, and you have to assume that Access is in there pitching its upcoming OS. I can just picture the conversation: "You already get the browser from us, why don't we just bundle it with the OS for one nice low fee?" Meanwhile, Panasonic just dropped Symbian and plans to refocus all its phone development on 3G phones and mobile Linux. You have to figure Access is talking to them as well.
I don't think most of the mobile observers in the US and Europe realize how intense the interest is in mobile Linux in Asia. A lot of very large companies are putting heavy investment into it. I'm sure this is why Access was willing to pay more than double PalmSource's market value to buy the company.
It's going to be very interesting to see what Access does to make that investment pay off in 2006.
(PS: In case you're wondering, I have no ties to PalmSource/Access and no motivation to hype their story. I just want folks to understand that the mobile OS wars aren't even close to over.)
I think it's very likely that recent changes in Symbian-land will open a new chapter in the soap opera over the company's ownership structure. At the end, there will probably either be some significant new Symbian owners, or Nokia will finally be majority owner of the company.
Either development will generate a lot of public discussion, hand-wringing, and general angst, but probably won't make any meaningful difference in the company's behavior and fortunes. It should be entertaining, though. Here's what to watch for.
Symbian is owned by a consortium of mobile phone companies:
Nokia 47.9%
Ericsson 15.6%
SonyEricsson 13.1%
Panasonic 10.5%
Siemens 8.4%
Samsung 4.5%
Psion, the company that invented Symbian OS, used to be a major owner. But last year it pulled out and announced plans to sell its shares to Nokia, which would have ended up owning more than 60% of the company. There was a huge fuss, with many people saying that if Nokia owned more than 50% of the shares, Symbian would no longer be an independent platform but a slave to Nokia's whims. In the end, Psion's shares were split among Nokia, SonyEricsson, Panasonic, and Siemens, with Nokia getting 47.9%. Crisis averted.
But the big fuss was actually kind of a sideshow, because under the rules of Symbian's governance, major initiatives must be approved by 70% of the ownership. In other words, you have to own 70% of the company to bend it totally to your will, and if you have just 30% ownership you can veto any major plan.
Guess what -- Nokia was and remains the only partner with more than 30% ownership. So it already exercises huge influence over what Symbian does. But it won't have full control unless and until it hits 70%. As far as I can tell, what bugged the other Symbian partners was the impression people would get if Nokia owned 50% or more of Symbian, and that's what they were fighting over in 2004.
Fast forward to today. Two of Symbian's owners, companies that played a key role in the rescue mission of 2004, are apparently dropping Symbian OS. Panasonic just dramatically restructured its mobile phone business, focusing solely on 3G phones and stopping all Symbian development efforts in favor of Linux. In mid-2005 Siemens sold its mobile phone division, including its Symbian shares, to Benq. Siemens and Benq were both Symbian licensees, and both have reportedly had serious problems with product delays and poor Symbian sales. There have been persistent rumors in the Symbian community that Benq is dropping the OS, and DigiTimes, a Taiwanese publication that has a history of getting insider stories, just ran an article quoting anonymous sources saying the same thing. For the record, I should let you know that I could not find an official announcement about this by Benq. But the continuing reports and rumors are very ominous.
The implications of all this haven't been discussed much online, but let's face it -- how long will Benq and Panasonic want to remain part owners in an OS they no longer use and that damaged their phone businesses? That means 18.9% of Symbian is likely to be for sale in the near future (if it isn't already).
What will happen?
It's possible that a transfer of ownership will be negotiated behind the scenes, in which case Symbian might avoid another big public debate. That would be much better for the company and its partners, but less fun for people who write weblogs.
Whether the change happens in public or private, I think there are several possibilities for the future ownership structure:
--New owners buy the shares. I think the most likely candidates would be NTT DoCoMo and Fujitsu. DoCoMo is shipping a lot of 3G Symbian phones in Japan, and Fujitsu makes most of them. Sharp is also a candidate, I guess; it's just started offering Symbian phones. I don't know how the other Symbian partners (and other operators) would feel about DoCoMo owning part of the company. My guess is the operators would be profoundly uncomfortable, and would be less willing to carry Symbian phones. So Fujitsu and maybe Sharp are probably the best bets.
--Nokia buys the 18.9%. This would give it just under 70% ownership. In other words, there would be no practical change in Symbian's governance, but the optics would scare a lot of licensees. In particular, SonyEricsson has expressed strong discomfort with Nokia getting more than 50%. In the analyst sales estimates I used to get while at PalmSource, shipments of SonyEricsson's Symbian phones had been pretty much flat for a very long time, and the company doesn't seem anxious to put the OS in a lot more models. Increased Nokia ownership of Symbian might be the last straw that would drive S-E away from the OS completely. In that case Nokia would probably have to step in and buy even more of the company.
--Symbian goes public. For years Symbian employees were told that the company was headed toward a public offering, which generated a lot of excitement among them. But eventually the phone companies refused to surrender their control over Symbian and the IPO talk died out. If Nokia were unwilling to take on even more ownership of Symbian, and other investors could not be found, then I guess it's possible that all the owners might decide they want to cash out. This would be exciting for Symbian employees for a little while, but I think that if Nokia didn't control Symbian it would be less willing to use the OS in the long term. So Symbian might go public just in time to evaporate. Which leads me to the last scenario:
--Nokia dumps Symbian and the whole thing falls apart. I don't think this is likely, but phone industry analysis company ARC Chart estimates that Nokia's currently paying Symbian more than $100 million a year for the privilege of bundling Symbian OS with a lot of its phones, and the more Nokia uses Symbian, the more money it owes. It's clear that Nokia is deeply committed to Series 60, its software layer running on top of Symbian. But Series 60 could (with a huge amount of work) be ported to run on top of something else.
Having lived through a couple of OS migrations at Apple and Palm, I should emphasize that changing your OS is very easy for an analyst to write about and very, very, very hard to do in reality. You spend years (literally) rewriting plumbing rather than innovating. It's not something you do unless you have a lot of incentive.
But saving $100 million a year is a pretty big incentive…
The other question people will ask is what this means to phone buyers. Should you avoid Symbian devices because of this uncertainty? My answer: absolutely not. Buy the device that best meets your needs best, regardless of OS. If you avoided every smartphone that has uncertainty about it, you wouldn't be able to buy anything. I'm going to come back to this subject in a future post.
