Drawing a Line in the Sand
By Niall McKay, Thu Nov 15 00:00:00 GMT 2001

Nokia's new software platform, called Series 60, aims to transform an industry. But will it pan out?

Mobile communications giant Nokia is set to take on Microsoft and Palm in the battle for dominance of the handheld computer and smartphone market with the introduction of a new software platform called Series 60.

The company also announced at the Comdex computer trade show in Los Vegas this week that it is leading a consortium featuring telecommunications operators such as AT&T, Cingular, MM02 (BT), NTT DoCoMo, Telefonica Moviles, and Vodafone, and consumer electronics vendors such as Fujitsu, Matsushita, Mitsubishi Electric, Motorola, NEC, Samsung, Sharp, Siemens, Sony Ericsson, and Toshiba.

The consortium members are committed to developing software and services that comply with current standards and that interoperate with each other's products. Its objective is to boost the uptake of oft talked about but seldom deployed third generation (3G) wireless networks.

Third generation, currently the Golden Fleece of the wireless sector, promises to add data, video, audio and multimedia to current voice offerings - giving consumers the ability to download music, view the latest music video, or access the Internet at high speed using their mobile phone or handheld computer.

A new direction

"This initiative is all about making sure that we stretch the market potential of future mobile services to the maximum," said Nokia's chief executive Jorma Ollila, in a statement at the Comdex Trade Show in Las Vegas on Monday.

Microsoft, Palm, Openwave, and Qualcomm were however, capriciously absent from the consortium and thus there are several blocks of competing vendors shaping up to battle it out for market share. It also remains to be seen weather such an alliance will boost the market by providing interoperable products among the consortium members or hinder the market by not having prominent players such as Microsoft, Palm and Qualcomm signed on.

Furthermore, there is a blurring of the lines between handheld devices such as smartphones, PDAs and consumer devices such as digital music players and even telephones. Most vendors will tell you that in the future there will be different devices to serve different needs. However, ask them what applications are they willing to leave out of their future product lines and there will be a long silence.

The announcement also signifies Nokia's intention to shift its business model from that of a pure hardware vendor towards that of a software, services and hardware provider. The move should help the company secure its position in the electronic organizer and mobile device market place as the two formerly separate industries converge.

In fact, Nokia is, in very real sense getting into the software business with the launch of the Series 60 mobile wireless software platform, which the company will license to competitors and partners alike. The software package is built on top of Symbian's EPOC operating system and will provide applications such as telephony, personal information management, multimedia messaging (MMS), Short Messaging Service (SMS), WAP and XHTML mobile browsing, and synchronization software.

The applications will also be available as standalone modules that will run on a variety of other operating systems. Indeed, it's already licensed its mobile browsing technology to Samsung. Nokia will license the source code to its customers to that they can optimize it for their own products and enhance them for their customers.

"Basically we feel that Nokia mobile phones will be the biggest customer for the new Series 60 software product suite," says Nokia Communications manager Pekka Isosomppi. "However we will offer the product to competitors for a fair and equitable fee."

One would wonder, given the poor record of technology companies to successfully build hardware platforms and license software implementations that run on them to competing vendors, weather Nokia will eventually, like many others, try and get out of the hardware business altogether.

Alternatively, it could pursue a strategy favored by Sun Microsystems, Palm and Apple where it produces the hardware platform and drives the software development for the industry. This often gives rise to better hardware/software integration but creates mistrust among partners and competitors. It has to be said that its not a policy that that has been successful in the past but what choice does the company have. Currently there are few vendors, bar Microsoft, that are willing to take on the task of driving the software platform.

The big question is weather Nokia intends to use its suite of software product as a cash cow or is it simply trying to kick-start the market so that it can sell more hardware. Of course, company officials opt for the latter but then why charge a license fee?

The balance of power

Currently there are three major software companies competing for handheld computer market share: Palm Inc., Microsoft with PocketPC, and Symbian.

Palm dominated the market for the past five years largely due to its simplicity and ease of use. However in the last 12 months, it has begun to loose market share to Compaq, HP, and Casio because it has had a difficult time continually adding extra functionality such as multimedia and communications on the original software kernel.

The company has also pursued the strategy of licensing its software to Sony and its greatest rival Handspring. Recently the Palm purchased Be Inc. but has yet to say how it intends to use its new acquisition to bolster its product offering.

Meanwhile, Microsoft has exceeded all expectations and has taken what was a terrible piece of software, the WindowsCE platform, and transformed it into PocketPC. Together with Compaq and HP, Acer NEC and Casio it has captured a significant slice of the corporate market because of its similarity to and compatibility with the desktop PC platform.

Then there's Symbian. EPOC was originally developed by British handheld computer manufacturer Psion, which then spun off its software division into a separate company with the financial backing of Nokia, Ericsson and Motorola - who collectively control the lion's share of the mobile phone market.

Certainly, there's a great deal at stake here. While revenues of most high-tech sectors have dropped significantly since the downturn sales of mobile wireless hardware, applications and services are still set to grow by 28 percent annually through 2004, according to the consulting firm Cahner's In-Stat Group. By that time over half of all computing devices shipped will be wireless enabled.

Another research company, Micrologic makes the optimistic prediction that 1.6 million third generation handsets will ship this year, mostly in Korea and Japan - both of which have already rolled out third generation networks.

But outside of Japan and Korea, the rollout of both 2.5 generation (using GPRS) and third generation networks have been dogged by, among other things, standards battles and infighting within the technology world.

"The problem is that WAP - the Wireless Application Protocol, now actually stands for 'what a pity,'" says Seamus McAteer, director of the Zelos Group, a consultancy firm based in San Francisco. "It's a good example that telecommunications standards are notoriously hard to define and even when they are defined and agreed upon they're notoriously hard to implement."

But the industry is learning. Neither Nokia nor the consortium members have proposed any new standards. Far from it, they are proposing to make all their software comply with standards from Sun's Java Division, the WAP Forum, and the 3GPP.

Learning from the past

Indeed one doesn't have to look far for an example of how telecommunications infighting and competing standards have damaged a market. The United States still lags a long way behind Europe and Asia because of its reluctance to use a unified standard, such as GSM.

So Nokia's consortium is a good thing? "It might be Nokia posturing or it might be a good thing," says McAteer. "If the members are seriously committed to creating a market for third generation wireless applications then it could work."

Mr. McAteer points out that NTT DoCoMo is able to be first to market with third generation in Japan because it owns the Japanese market. "In Europe and the US you have to have to rally the hardware vendors, the software vendors, the application providers and telecommunications carriers before you can roll out a single product.

Even then it is impossible to know which applications will be the most popular. Technology vendors typically concentrate on cool implementations of wireless technology - such as viewing video on their wireless device or cell phone and customers in Japan use the service to download animated characters onto there phone. And who would have thought that both SMS and downloadable ringing tones would become revenue the streams for the wireless telecommunication carriers?

Still, Nokia and its partners have a point. If they don't start developing the applications, creating services, ensuring interoperability, and building a market for the products now then its 3G could join that long list of good ideas that just never caught on and be superceded by an inferior technology.

Remember ISDN and Betamax?

Niall McKay is a freelance writer living in Silicon Valley. He can be reached at www.niall.org.