Symbian Ltd. - The Growing Pains of Network Alliances

In the late 90s, many of the world's biggest mobile telephony firms concluded that the next generation of data-enabled handsets (or smart phones) would either be equipped with "open" operating systems, or Microsoft would provide their software and capture a disproportionate share of their value. Symbian Ltd, a joint venture between Nokia, Motorola, Ericsson and Psion, aimed at creating such a system and attracting the network of partners needed to launch the smart phone industry. But as the Timken Chaired Professor of Global Technology and Innovation Yves L. Doz and Senior Research Fellow Mark Hunter show, Symbian's development unavoidably brought tensions, as the influence of crucial partners waned or grew.

by Yves Doz, Mark Hunter

In the late 90s, many of the world's leading cellphone makers formed a joint venture, Symbian Ltd., with UK-based palmtop maker Psion. Beginning in 1996, Psion began licensing its operating system (OS) software to Nokia and Ericsson, while developing a lighter and more battery-friendly operating system than the then-market leader, Microsoft, could provide.

The initial collaboration aimed at creating an alternative OS to Windows - and thus to prevent Microsoft from being able to dominate the emerging 'smart phone' market to the same extent it had captured the value in the PC market. Symbian OS was to be an 'open' system, which could be licensed and developed by anyone willing to pay the same fees as the founders.

That philosophy helped to attract literally hundreds of partners, from leading software firms to applications developers. But as the Timken Chaired Professor of Global Technology and Innovation Yves L. Doz and Senior Research Fellow Mark Hunter show, the emergence and definition of successive layers of value in smart phones led to a redistribution of influence within Symbian, and ultimately to the question of whether Symbian might become Nokia's quasi-proprietary platform.

There is a certain irony here. Symbian shareholders were loath to allow any of the founding partners to dominate the venture, and sought to erect various countermeasures preventing this possibility, including erecting high firewalls between owners and management. But as the case illustrates, different speeds of innovation and development between Nokia, Symbian Ltd. and the other partners resulted in Nokia taking the lead in a crucial value layer (the user interface), and subsequently in applications depending on the interface.

By 2004, when the case ends, Motorola has exited the Symbian venture, leaving Nokia and Psion in possession of its shares. While this allowed both firms to halt any major decisions concerning Symbian's development that displeased them, Psion's position within the venture was considerably and rapidly weakening.

When Psion in turn decides to exit, the future of Symbian OS turns on a stark question: What is Nokia going to do? Will it seek to dominate the Symbian platform, or to keep the promise of openness that attracted a network of collaborators? Can Nokia go it alone, and if it does, will it create or destroy value?

This case provides an excellent basis for discussion of the meaning of "value layers" in network alliances, and how these can serve as either enablers or obstacles to network participants. The development of value layers changes dynamics of influence and collaboration, not only within an alliance, but in its larger ecosystem.

In the end, Symbian stands as a major example of a successful alliance in the field of new industry creation - one in which the appearance, as well as the reality, of partners' strategic intentions impacts powerfully on the alliance's value creation.


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