INVASIVE MANEUVERS

Nokia champions a new interoperability standard for advanced wireless services and agrees to license its software to rivals. The moves set up a showdown with Microsoft over the future of operating systems.

Nokia's effort to disseminate its mobile data software to competitors and create an open architecture for wireless data services might be a smokescreen for a larger initiative. Nokia now appears headed for a showdown with Microsoft over which company will dominate the landscape for wireless operating platforms.

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While interoperability is a major hurdle standing in the way of third-generation mobile services, clearing it would drive earlier and deeper adoption of such services, which in turn would drive sales of 3G-enabled handsets. All of which benefits wireless handset makers in general — which have seen handset sales stagnate of late — and particularly a company whose nameplate is on one in every three mobile phones sold worldwide.

“Consumers today expect choice and value,” said Jorma Ollila, Nokia's chairman and CEO, at last week's Comdex 2001 in Las Vegas. “To deliver this there must be a common standard and seamless interoperability.”

The problem, according to Rebecca Diercks, director of wireless research for Cahners In-Stat Group, is that such initiatives have been discussed before with little to show for the effort. “Once they have done some lab trials and can point to specific products or services, that would get my attention a little more,” she said.

Another problem is that the consortium — which consists of 18 wireless vendors and carriers including Nokia (see table) — largely excludes companies that are CDMA-focused. Conspicuous in their absence are Verizon Wireless — the largest wireless carrier in the U.S. — Sprint PCS and Qualcomm. “We don't know anything more about this than what we read in the press release,” said a spokesman for Verizon Wireless.

THE GLOBAL MOBILE  ARCHITECTURE INITIATIVE
WHO'S IN AT&T Wireless Cingular Wireless MMo2 NTT DoCoMo Telefonica Moviles Vodafone Fujitsu Matsushita Mitsubishi Electric Motorola NEC Samsung Sharp Siemens Sony Ericsson Toshiba Symbian	WHO'S NOT Verizon Wireless Sprint PCS Qualcomm Motorola Palm Source: Nokia

While Nokia has indicated CDMA companies are welcome (Samsung, the Korean handset maker that uses the technology, is part of the initiative) Ollila issued a not-so-warm invitation by saying, “GSM is the platform on which true added-value services are being built today. GSM is a robust winner that is capable of reaching any standard.”

Eddie Hold, director of telecom services for Current Analysis, said the initiative must expand beyond its current GSM focus if it wants to achieve its goal in the domestic market. “The goal should be global interoperability and, as such, must include CDMA and TDMA. Without the inclusion of these technologies, the benefits of this interoperability will be very limited in the U.S. market.”

The omission, however, may stem from a desire to maintain control over the effort. Diercks said it is difficult enough to achieve data service interoperability over one platform; it would be quite another matter to do it across both GSM and CDMA. “They have to tackle something they think they can handle first,” she said. “Inviting the CDMA companies in at this point and saying they're going to assure interoperability among all would be a big bite to chew off — and probably more than they want to take on right away.”

Qualcomm's Marketing Vice President Jeremy James didn't seem offended by the apparent slight. “You have to start somewhere, and Europe is a logical place to start for Nokia.” When Qualcomm launched its binary runtime environment for wireless platform technology, it started with CDMA, he added.

Nokia's decision to license its software platform is less complicated, at least at first glance. The company's strong brand awareness among consumers and manufacturers will create demand and lead to an array of Nokia clones that should generate sizeable licensing revenues for the company. “People who like Nokia phones will go to phones that have a similar look and feel,” said Michael Ransom, senior analyst for Current Analysis.

A plethora of knockoffs flooding the market shouldn't be much of an issue for Nokia. “[Nokia] has a range of products across the whole spectrum,” Ransom said, adding that knockoffs would become a problem only if Nokia stopped innovating. If that were to happen, “they may disappear into the market and be seen as just another phone.”

The components that will be licensed include multimedia messaging service and short message service clients, a WAP/XHTML browser and a SyncML-based synchronization engine. The Series 60 software platform is designed for the Symbian operating system and supports browsing, multimedia messaging and content downloading. Both the terminal components and the software will be available as source code, which will allow licensees to modify them.

While Nokia has a vested interest in boosting Symbian — the joint venture between it, Motorola, Ericsson and Matsushita — the real reason it is entering the licensing arena is to take on Microsoft, said Neil Ward-Dutton, research director for Ovum.

Microsoft has been pushing its own smartphone platform, Stinger, through OEM channels. That may explain why neither Microsoft nor any other operating system developer has been invited into the global architecture initiative. For 3G services to reach their full potential, interoperability between handsets, personal digital assistants and PCs must also be achieved, and their absence is evidence that Nokia might be gearing up for a battle, Ward-Dutton said.

But it won't happen right away. Microsoft will work its way up from the desktop while Nokia works its way down from the handset, Ward-Dutton said. “At the moment they are at opposite ends of the market,” he added. “The collision point will be in the enterprise.”

If anyone in the wireless space can take on Microsoft, it's Nokia, said Andrew Cole, vice president for Adventis and head of the firm's global wireless practice. “They are the dominant player… they have the connection into the other key players, and they are more trusted than Microsoft, which is absolutely not trusted by wireless carriers.”

Cole said Nokia's biggest challenge will be gaining credibility for its software offerings. “This is a little bit noncore for them,” he said.

But Juha Christensen, a former Symbian executive who is now Microsoft's vice president of mobility, said Nokia is setting itself up for failure. “Nokia will have created a monster, and it will want to shut it down fairly quickly. You can't be in the software business and the hardware business simultaneously,” he said.

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With additional reporting by Kevin Fitchard and Kelly Carroll in Chicago.