Giving away the mobile OS

The mobile phone operating system was supposed to be a critical part of the value chain — what drove the mobile computing revolution and powered the smartphones flooding the market. But companies such as Google and Nokia now seem to be questioning the value of the OS.

Neither is claiming a powerful, feature-rich software stack isn't necessary to good smartphones, but their recent moves certainly question whether anyone should pay for it. Last week, Nokia kicked off a strange initiative that has it buying up remaining shares of Symbian — the OS powering its market-leading line of S60 smartphones — only to transfer them to a non-profit foundation that will distribute, royalty-free, the OS and associated graphical interfaces.

Nokia, along with other Symbian Foundation members such as AT&T and Motorola, will continue to contribute to the Symbian OS and user interface but will no longer run the S60 developer program. As Mary McDowell, chief development officer for Nokia, said, Nokia doesn't want “to invest that much in the plumbing” anymore.

Google did the same thing earlier this year when it turned its Android code over to the Open Handset Alliance. Google never had any interest in selling an OS in the first place. It wanted a platform friendly to its version of Web-based apps, and with Android it got it. Nokia now appears to want the same.

So where does that leave the software vendors that have built their business models around proprietary OSs? Apple and RIM may not sweat the open trend too much; they built their OSs for internal use so they could sell more iPhones and BlackBerrys as well as associated services. Microsoft, however, has always been a seller of OSs, and its primary presence in the mobile market is Windows Mobile. If the trend toward the free OS continues, Microsoft may have to rethink its strategy, offering free or close-to-free licenses for Windows Mobile, said Jack Gold, principal analyst for J. Gold Associates.

“It may be difficult for Microsoft to continue to justify its relatively high license fees for an OS that competes with a fully featured one that is offered for free,” Gold said. “It will have to make its revenues on applications and services instead.”