Nokia Buys TrollTech, But not for the Obvious Reason

| Jan 30, 2008 | Mobile Devices | Competitive Intelligence Report

| Analyst: Avi Greengart

Current Perspective: Positive/Neutral
Vendor Importance: High
Market Impact: Moderate/High

Event Summary

January 28, 2008 - Nokia and Trolltech ASA announced that they have entered into an agreement that Nokia will make a public voluntary tender offer to acquire Trolltech, a recognized software provider with world-class software development platforms and frameworks. In addition to the key software assets, its talented team will play an important role in accelerating the implementation of Nokia's software strategy.

Analytical Summary

• Current Perspective: Slightly positive on Nokia’s acquisition of TrollTech, because it gives the handset vendor an incredibly versatile set of assets Nokia can apply to its handsets and online software development efforts, if it can only sort through which ones it should use. The obvious reason to purchase TrollTech would be as a hedge against Google’s Android by using Qtopia Phone Edition (a ready-made mobile Linux platform) and taking advantage of TrollTech’s experience with the open source software community. Eschewing the obvious, Nokia has articulated a confusing vision of how it plans to use the new TrollTech’s resources, highlighting TrollTech’s cross platform development tools – both for internal use when building ovi applications, and for developers writing applications for Series 40 and Series 60 – while leaving its existing mobile Linux and software development assets unchanged.

• Vendor Importance: High to Nokia’s smartphone and mobile Linux efforts, because when compared to other recent Nokia acquisitions, TrollTech is inexpensive and rich in strategically valuable mobile Linux assets that underlie most of the commercially shipping Linux phones on the market today (including Motorola’s Ming and RAZR2).

• Market Impact: Moderate to high on smartphones, even if Nokia just uses its new TrollTech assets as developer tools because resurrecting interest in Qtopia further fragments the mobile OS landscape. Nokia could easily shoot itself in the foot, confusing S60 developers (and Linux maemo developers) just when the company needs to ramp up its efforts to compete with Android, Apple, Microsoft, RIM, Symbian UIQ and every other flavor of mobile Linux, including upcoming versions from ACCESS and Palm. However, if Nokia replaces maemo Linux with Qtopia Phone Edition, that could then be positioned as a strong alternative to Google’s Android for open source developers.

Analytical Summary

• Nokia needs to be careful that a muddled message doesn’t freeze S60 application development, which means there’s a nice opportunity for Microsoft to help the process along in the other direction. Microsoft should say that Nokia needs high level application development tools, because developing native Symbian apps is a nightmare. Microsoft should promote that Windows Mobile uses the same tools that enterprise Windows developers are already familiar with to develop native Windows Mobile apps quickly for a rapidly growing installed base of devices.

• Symbian needs to downplay the mobile Linux aspects of the TrollTech acquisition and promote Nokia’s official rationale for the acquisition, which is to speed S60 application development time to market. Symbian can also brag that it has the largest installed base of devices on the market by a huge margin.

• Google and Apple do not need to respond directly to this announcement. Instead, they should compete by shipping their SDKs. Google has to provide better documentation and fix a whole bunch of bugs, while Apple needs to provide developers with full access to the iPhone’s hardware and a method of getting applications to market.

• Motorola should stress that its mobile Linux implementation is heavily based on its own internal contributions, not just TrollTech, and note that it intends to bring its platforms into compliance with the LiMo standards. But more importantly, Motorola needs to winnow its own list of OS platforms down to a reasonable number. The current stable includes an ownership stake in UIQ, member status in both OHA and LiMo, its current Linux/Java platform, and Windows Mobile.

• LG has the opposite problem: it doesn’t have enough smartphone platforms. LG’s most compelling devices globally (and all of its handset in the U.S. market) are featurephones, not smartphones. (This is a key challenge for the LG Voyager at Verizon Wireless.)

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