Move to smart phones means profitability for Symbian

Mobile operating system licenser Symbian will approach profitability as a higher percentage of handsets shipped by operators start to fall into the smart phone category.

So far the UK-based company, even by its own admission, hasn't had a large presence across the mobile market. Users either see phones with bespoke OSes and user interfaces - which generally are not particularly distinctive or versatile (one of a smart phone's defining characteristics) - or have hybrid devices such as PDAs based on the Palm OS or PocketPC, neither of which are widely known for also supporting voice calls.

However Morgan Gillis, Symbian EVP sales, told silicon.com: "Today smart phones are a small category but we expect them to reach 40 to 50 per cent [of shipments]."

Last year two million phones shipped running Symbian, from three manufacturers. Now there are 22 additional terminals in the pipeline from eight makers. The forecast is that 35-40 per cent of mid- to high-end phones shipped in 2004 will be Symbian OS-based - meaning high visibility and more revenue.

Thomas Chambers, Symbian CFO, revealed the company makes $5 on every unit shipped, and keeps 80 per cent of that, allowing for fees it must itself pass on for technology it licenses. This means it must have a run rate of 18 million handsets per year to break even - nine times its current level.

This week, the best news for Symbian was Samsung - the most successful handset maker of the past two years - taking a five per cent stake in the company. Other existing shareholders, such as Siemens and SonyEricsson have also unveiled Symbian-based devices.

Although Samsung will continue experimenting with the Microsoft and Palm operating systems, the Korean firm's commitment is notable as, at the very least, a £17m strategic endorsement.

Microsoft has done its best to shrug off Samsung leaning towards Symbian. Ed Suwanjindar, lead product manager at Microsoft's mobile devices division, told silicon.com: "[Microsoft and Symbian] have the same goal in mind but we're approaching convergence from different directions."

He said that in the new world of mobile devices "data makes the difference" and that Microsoft brings to the table its experience of email, both in terms of R&D and usability.

Many analysts have noted the Redmond giant will play to its strengths of users perceiving to be able to more easily integrate Microsoft-based devices with Exchange servers and other enterprise software.

That may be part of the bad news for Symbian, and a reason why it and Nokia, the vendor arguably most closely associated with it, have gone out of their way to stress their tie ups for horizontal applications with enterprise vendors such as IBM and Oracle.

The other bad news of the last few days has been Motorola saying it will look to use a combination of Linux and Java in some markets, most notably China. Motorola is another major Symbian shareholder. The others, with stakes of varying sizes, are Ericsson, Matsushita and Psion, the UK company where the OS was originally conceived.